Calculating Parent’s Annual Return on Investment: 100% Ownership On 1/1/06, Pynco Inc. ac¬

quired 100% of Synco Inc.’s outstanding common stock for $1,000,000 cash. For 2006, Synco re¬ ported net income of $150,000. On 12/31/06, Synco declared and paid a $100,000 cash dividend to Pynco. During 2006, Pynco (which uses the equity method) amortized $30,000 of cost in excess of book value.
Required 1. Calculate Pynco’s annual return on investment (AROI) for 2006.
2. Calculate Pynco’s AROI for 2006 assuming that the dividend was declared and paid on 1/3/06— not 12/31/06.