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20.17*ROI and RI (D. Kleespie, adapted) OBJECTIVES 3,4 The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures
20.17*ROI and RI (D. Kleespie, adapted) OBJECTIVES 3,4 The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product-AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers' shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment centre for Sports Equipment: Total annual fixed costs Variable cost per AccuDriver Number of AccuDrivers sold each year Average operating assets invested in the division $26 000000 $600 170000 S46000000 REQUIRED 1. Calculate Sports Equipments's ROI if the selling price of AccuDrivers is $830 per club. 2. If management requires an ROI of at least 28% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club? 3. Assume that Sports Equipment judges the performance of its investment centres on the basis of RI rather than ROI. What is the minimum selling price that Sports Equipment should charge per AccuDriver if the company's required rate of return is 18%
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