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12-8 Selected sales and operating data for three division of different structural engineering firms are givin as follows: Sales $ 12,000,000 $ 14,0000,000 $25,000,000 Average
12-8 Selected sales and operating data for three division of different structural engineering firms are givin as follows: Sales $ 12,000,000 $ 14,0000,000 $25,000,000 Average operating assets $3,000,000 $ 7,000,000 $5,000,000 Net operating income $ 600,000 $ 560,000 $ 800,000 Minmum required rate of return 14% 10% 14% 1.compute the return on investment(ROI) foe each divodion using the formula stated in terms of margin and turnover. Compute the residual income for each division. Assume that each division is presented with an investment oppttunity that would yield a 15% rate of return. A) If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? Why B) If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject? why
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