Calculate return on investment

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Reference no: EM132767598

Question - Valley Ltd provides the following data:

Net operating profit $1,800,000

Total assets $6,460,000

The company's required rate of return is 15%.

Required -

a) Calculate return on investment.

b) Calculate residual income.

c) The manager is looking into a potential new line of business requiring and investment of $1,700,000 which is likely to realise a profit of $300,000. What decision would the manager reach if performance is measured under:

i. ROI

ii. RI

Reference no: EM132767598

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