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1. What is the original return on investment (ROI) for Austen Ceramics (before making any additional investment)? 2. What would the ROI be for Austen

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1. What is the original return on investment (ROI) for Austen Ceramics (before making any additional investment)? 2. What would the ROI be for Austen Ceramics if this investment opportunity were undertaken? Would the manager of the Austen Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Gammaro Corporation? Why or why not? 4. What would the residual income (RI) be for Austen Ceramics if this investment opportunity were to be undertaken? Would the manager of the Austen Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the Rl of the investment opportunity? Would the investment be desirable from the standpoint of Gammaro Corporation? Why or why not? 6. Which performance measurement method, ROI or RI, promotes goal congruence? Why? Austen Ceramics, a division of Gammaro Corporation has an operating income of $85 000 and total assets of $425,000. The required rate of return for the company is 10%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Austen Ceramics has the opportunity to undertake a new project that will require an investment of $175,000. This investment would eam $24.500 for the company Read the requirements RO Requirement 1. What is the original return on investment (1) for Antun Caramita (betore making any additional investerity? First determine the formula to calculate the ROI Operating income ter the percentage to two decime places) The original retum on investment (ROI) for Aston Ceramica in Requirement 2. What would be Rot be for Austen Cermice if this investorent opportuny wore undertaken? Would the manager of the Austen Ceramica ovision want to make this investment if the were sunted based on RON Why or why not? or the percentage to two comples) it in investment opportunity were undertaken, the Hot would be 14 % 20 Austen Ceramics, a division of Garnmaro Corporation has an operating income of $85,000 and total assets of $425,000. The required rate of return for the company is 10%. The companys evaluating whether it should use return on investment (ROI) or residual income (RI) as a masurement of performance for its division managers. The manager of Austen Ceramics has the opportunity to undertake a new project that will require an investment of $175,000. This investment would earn $24.500 for the company Read the regulamente ROI Requirement 1. What is the original retum on investment (ROI) for Auston Ceramics (before making any additional inventmenty? First determine the fomuin to calculate the ROI Operating income Total assets Enter the porcentage to two decimal placen.) The original ratum on investment (Ron for Auston Ceramics 20 Requirement 2. What would the rol be for Austen Ceramics i investment opportunity were undertaken? Would the manager of the Auston Ceramics division want to make this investment were evaluated based on ROI? Why or why not? (Enter the paroutage to two decimal places) ut the investment opportunity were undertaken the ROI would be

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