10.4

Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.51 percent. Selected operating data for the three divisions follow:

$ Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets Peak 344,000 $ 203,000 40,000 1,350,000 View 227,000 $ 115,000 33,000 890,000 Grand 317,000 189,000 34,000 1,085,000 Required: 1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) Peak View Grand Return on Investment 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.) Peak View Grand Residual Income (Loss)