Safari File Edit View History Bookmarks Window Help ? ? . 72%) L, E )) Sat Jun 3

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Safari File Edit View History Bookmarks Window Help ? ? . 72%) L, E )) Sat Jun 30 4:52 PM Alex C ezto.mheducation.com Home - alamo.edu value 11.11 points Luke Company has three divisions: Peak, View, and Grand. The ?mpany has a hurdle rate of 6.26 percent. Selected operating data for the three divisions follow. Peak View Grand Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets S 334,000 S 223,000 S 311,000 183,000 30,000 960,000 1,195,000 205,000 35,000 118,000 37,000 1,210,000 Required: 1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) Peak View Grand Return on Investment 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.) Peak View Grand Residual Income (Loss) Hints References eBook & Resources afari.dmg 0

Explanation / Answer

1) Calculate return on investment :

2) Compute residual income :

Peak View Grand Sales revenue 334000 223000 311000 Cost of goods sold 205000 118000 183000 Miscellaneous expense 35000 37000 30000 Net income 94000 68000 98000 Average operating assets 1210000 960000 1195000 ROI 7.77% 7.08% 8.20%

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