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6 (5 marks) Food for Healthy Eating Ltd has three divisions, Cereal, Dried Fruit, and Health Snacks. The current level of investments and operating profits
6 (5 marks) Food for Healthy Eating Ltd has three divisions, Cereal, Dried Fruit, and Health Snacks. The current level of investments and operating profits by each division are as follows: Cereal Division Operating assets $4,500,000 Operating profit $445,000 Required: Dried Fruit Division Healthy Snacks Division $3,400,000 $4,000,000 $250,000 $380,000 i. Compute the Return on Investment (ROI) for each division. ii. Compute the Residual Income (RI) for each division. Food for Health Eating Ltd requires a minimum rate of return of 8%. iii. Under what type of situation would return on investment (ROI) be a better performance measure than residual income and vice versa
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