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Adams Technologies, Inc. has three divisions. Adams has a desired rate of return of 13.0 percent. The operating assets and income for each division are
Adams Technologies, Inc. has three divisions. Adams has a desired rate of return of 13.0 percent. The operating assets and income for each division are as follows: Divisions Printer Copier Fax Total Operating Assets $ 550,000 820,000 370,000 $1,740,000 Operating Income $ 96,800 97,580 54,760 $249,140 Adams headquarters has $121,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Divisions Printer Copier Fax Expected ROIS for Additional Investments 14.5% 13.5% 12.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $121,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $121,000 of investment funds? d. Which division offers the best investment opportunity for Adams? g. Calculate the residual income: (1) At the corporate (headquarters) level before the additional investment. (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Reg A1 Reg A2 to D Rea G1 Reg G2 to G4 Calculate the ROI for each division. (Round your answers to 1 decimal place. i.e., .234 should be entered as 23.4).) ROI Printer Division Copier Division Fax Division Req A1 Reg A2 to D Req G1 Req G2 to G4 a-2. Which division manager is currently producing the highest ROI? Printer division Based on ROI, which division manager would be most eager to ion manager would be most eager to Copier division accept the $121,000 of investment funds? Based on ROI, which division manager would be least likely to accept Fax division the $121,000 of investment funds? Which division offers the best investment opportunity for Adams? Printer division Reg A1 Reg A2 to D Req G1 Req G2 to G4 Calculate the residual income at the corporate (headquarters) level before the additional investment. Residual income Reg A1 Reg A2 to D Req G1 Req G2 to G4 Calculate the residual income: (Loss amounts should be indicated by a minus sign.) (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Show less Residual Income (loss) (2) Printer division Copier division Fax division Printer division Copier division Fax division (4) Printer division Copier division Fax division
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