Question
1.) XYZ, Inc. has an operating income of $753,140 and net assets of $3,941,032. XYZ's minimum rate of return is 19%. XYZ has the opportunity
1.) XYZ, Inc. has an operating income of $753,140 and net assets of $3,941,032. XYZ's minimum rate of return is 19%. XYZ has the opportunity to increase its operating income by $225,942 if it makes an investment of $788,206 in new assets. These assets will operate in conjunction with those already owned.
REQUIRED: Calculate the residual income of XYZ if the project is carried out. (Do not use decimals).
Answer:________________________________
2) XYZ, Inc. has an operating income of $721,699 and net assets of $3,613,262. XYZ's minimum rate of return is 17%. XYZ has the opportunity to increase its operating income by $216,510 if it makes an investment of $722,652 in new assets. These assets will operate in conjunction with the ones already owned.
REQUIRED: Calculate the return on investment (ROI) for XYZ if the project is carried out. (Round your answer to two decimals).
Answer:_____________________________
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