The following is partial information for Charleston Company\'s most recent year
ID: 2465091 • Letter: T
Question
The following is partial information for Charleston Company's most recent year of operation. It manufactures lawn mowers and categorizes its operations into two divisions: Bermuda and Midiron. Required: Without making any calculations, determine whether each division's return on investment is above or below Charleston's hurdle rate. Determine the missing amounts in the preceding table. (Round your return on investment answers to one decimal place. Round "Investment turnover" answers to 2 decimal place.) What is Charleston s hurdle rate? (Round your answers to 1 decimal place.) Suppose Charleston has the opportunity to invest additional assets to help expand the company's market share The expansion would require an average investment of $2,800,000 and would generate $140,000 in additional income Calculate Return on Investment.Explanation / Answer
1.
The bermuda division's return on investment is above the charleston hurdle rate
The midiron division's return on investment is below the charleston hurdle rate
2.
3.
hurdle is 4.80% Return on Investment
4a.
Return on Investment = 140000 / 2800000 = 5%
Barmuda Division Midiron Division Sales Revenue $800000 $600000 Average Invested Assets $2500000 $3750000 Net Operating Income $160000 $150000 Profit margin 20% 25% Investment turnover 0.32 0.16 Return on Investment 4.80% 4.80% Residual Income $40000 (30000)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.