Question
Ahlia is an investment centre within Stickleback Co. Ahlia has an operating profit of $30,000, and operating assets of $150,000. The cost of capital is
Ahlia is an investment centre within Stickleback Co. Ahlia has an operating profit of $30,000, and operating assets of $150,000. The cost of capital is 15%. There is a proposed investment of $15,000 which will increase the operating income by $1,900.
Instructions (4 marks each)
1. What is the return on investment (ROI) for Ahlia with and without the proposed investment?
2. What is the residual income (RI) for Ahlia with and without the proposed investment?
Ahlia is an investment centre within Stickleback Co. Ahlia has an operating profit of $30,000, and operating assets of $150,000. The cost of capital is 15%. There is a proposed investment of $15,000 which will increase the operating income by $1,900.
Instructions (4 marks each)
1. What is the return on investment (ROI) for Ahlia with and without the proposed investment?
2. What is the residual income (RI) for Ahlia with and without the proposed investment?
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The Quality Audit A Management Evaluation Tool
Authors: Charles A. Mills
1st Edition
0070424284, 978-0070424289
