Reference no: EM132509751
Evaluating New Investments Using Return on Investment (ROI) and Residual Income
Three divisions of Watcore Inc. report the following sales and operating data:
Division A Division B Division C
Sales . . .... . . . . . .. . .. .. $6,000,000 $10,000,000 $8,000,000
Average operating assets . . . $1,500,000 $5,000,000 $2,000,000
Operating income ... .... . . $300,000 $900,000 $180,000
Minimum required rate of return. 15% 18% 12%
Required:
Question 1. Compute the return on in vestment (ROI) for each division, using the formula stated in terms of margin and turnover.
Question 2. Compute the residual income for each division.
Question 3. Assume that each division is presented with an in vestment opportunity that would yield a rate of return of 17%.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject it? Why?
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject it? Why
|
EEPW 4355 Power System Operation and Reliability Assignment
: EEPW 4355 Power System Operation and Reliability Assignment Help and Solution, Shinas College of Technology - Assessment Writing Service
|
|
Record the reacquisition of the shares
: On December 31, 2020, Sandhill Treats Limited reported 37,000 common shares issued. Record the reacquisition of the shares
|
|
Communications and task management
: What tools are they using for communications and task management? What are the advantages and disadvantages of managing a virtual team?
|
|
Determining the bond yield to maturity
: A 4 year bond pays 4% annual interest (paid semi annually). It currently sells for $872.25. What is the bond's yield to maturity?
|
|
Compute the return on in vestment for each division
: If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject it? Why
|
|
Country international investment position
: On December 31, a country has the following stocks of international assets and liabilities to foreigners.
|
|
Code of ethics and conscious capitalism
: Students must choose one of the following terms for their research for Journal Article Summary 6: code of ethics, conscious capitalism,
|
|
Prepare the entries on the appropriate dates
: The fair value per share was $4 on March 1, $3.85 on March 14, and $4.35 on March 31. Prepare the entries on the appropriate dates to record the stock dividend
|
|
Total amount they would pay over the life
: If Aisling and Andrew decide to put Uncle Al's gift toward their down payment, how will this affect the total amount they would pay over the life of the loan fo
|