Database Systems is considering expansion into a new product line. Assets to support expansion will cost $500,000. It is estimated that Database can generate $1,200,000 in annual sales, with a 6 percent profit margin. What would net income and return on assets (investment) be for the year?

I can't wrap my mind around this question. Help!!

$1,200,000 in annual sales with a 6 percent profit margin= Net Income of $72,000

Your calculation of a 72,000 net income is correct.

Return on Assets = Net Income / Total Assets
ROA = 72,000 / 500,000
ROA = 14.4%

Thank you!