3. Three divisions of Jamieson Ltd, report the following sales and operating data Fitness Spa Athletic Training Services Wear Sales $600,000 $750,000 $400,000 Operating income $ 30.000 $ 37,500 $ 24,000 Net income $. 18.000 $ 22,500 $ 14,400 Average operating assets $200 000 $250,000 $100,000 Minimum required rate of return 10% 12% 10% - 3 3 Required: (total marks = 18) a) Calculate the ROI for each division using the DuPont method. b) Using the best performance of the three divisions as a benchmark, determine how each of the other two divisions would need to change their investments or operating results to achieve the same Rol using the DuPont method. Note that there are several different ways to achieve this, any that provide the desired results is acceptable. c) Compute the residual income for each division a) Assume that each division is presented with an investment opportunity that would yield a rate of return of 17% It would require a new investment of $60,000. DIf performance is being measured by ROI, determine whether each division is likely to accept or reject its investment opportunity, and explain why ii) If performance is bemg measured by residual income determine whether each division is likely to accept or reject its investment opportunity and explain why e) Jamieson can measure its average operating assets on a gross or net basis. Which would you recommend? Explain your rationale for your recommendation making sure it is clear why the one selected is preferable and from whose point of view 3 3 2