Reference no: EM132607498
Selected sales and operating data for three divisions of a multinational structural engineering firm are provided below:
Division Asia Europe North America
Sales $24,000,000 $26,000,000 $37,000,000
Average operating assets 6,000,000 9,320,000 14,800,000
Net operating income 780,000 760,000 1,332,000
Minimum required rate of return 13% 9 % 15%
Required:
Question 1: Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations and round your final answers to the nearest whole percent.)
Question 2: Compute the RI for each division.
Question 3: Assume that each division is presented with an investment opportunity that would yield a 12% rate of return.
a. If performance is being measured by ROI, which division(s) will probably accept the opportunity? Reject the opportunity?
b. If performance is being measured by RI, which division(s) will probably accept the opportunity? Reject the opportunity?
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