Compute the current roi of the northeast division

Reference no: EM132474710

Question 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired.

Question 2. What is the likely reaction of divisional management toward the acquisition? Why?

Question 3. What is the likely reaction of Megatronics' corporate management toward the acquisition? Why?

Question 4. Would the division be better off if it didn't upgrade the competitor to Megatronics' standards? Show computations to support your answer.

Question 5. Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired. Will divisional management be likely to change its attitude toward the acquisition? Why?

Attachment:- ROI.rar

Reference no: EM132474710

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