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Company A is considering whether or not to expand into another segment. It currently has an ROA (return on assets) measure of 5%. The proposed expansion involves spending $1m on new assets and will increase annual profits (after taxes) by $1,000. The expansion will:

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As a result of the expansion described, the effect will Decrease Company A’s overall ROA.

Effect on Company A ROA

The ROA is found by the formula:

= Net profit / Total assets

If the new project goes through, it will increase assets by $1 million while only increasing net profits by $1,000.

This means that the denominator of total assets will increase much more than the numerator of Net profit. This will lead to a lower ROA in general because a larger denominator leads to a smaller product when the numerator is divided.

Find out more on ROA at https://brainly.com/question/26415601.