Return to question Selected sales and operating data for three divisions of diff

Question

Return to question Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $5,500,000 $1,100,000 $ 253,000 Division B Sales Average operating assets Net operating income Minimum required rate of return Division C $ 9,500,000 8,600,000 $ 4,750,000 1,720,000 $ 817,000 159,100 12.5 points 15.00% 17.20% 12 . 00% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3, Assume that each division is presented with an investment opportunity that would yield a 17% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Answer is not complete Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3A Req 3B Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover ROI Division Division Division 23.00 % 17.20 % 9.25 % Mc Graw

Explanation / Answer

Compute ROI :

Margin Turnover ROI Division A 4.6% 5 23% Division B 8.6% 2 17.20% Division C 1.85% 5 9.25%

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