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ces Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Net operating incone.
ces Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Net operating incone. Minimum required rate of return Required: Division A $ 12,480,000 Division B $ 14,560,000 Division C $ 26,000,000 $ 7,280,000 $ 5,200,000 $ 624,000 $ 582,400 $ 832,000 14% 10% 16% $ 3,120,000 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an Investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 38 Compute the return on investment (RO1) for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 1 decimal place.) Division A Division B Division C Margin Turnover % ROI % % % Reg Req 2 > Req 1 Req 2 Req 3A Req 3B Compute the residual income (loss) for each division. (Do not round intermediate calculations. indicated by a minus sign.) Residual income (loss) Division A Division B Division C < Req 1 Req 3A > Req 1 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that is being measured by ROI, which division or divisions will probably accept or Division A Division B Division C < Req 2 Req 3B Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 1 is being measured by residual income, which division or divisions will probably accept or rej Division A Division B Division C < Req 3A Req 3B >
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