Commercial Services.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: $ 3,400,000 Net operating income $ 272,000 Average operating assets $ 850,000 The following questions are to be considered independently. Sales ercise 10-13 Part 3 (Algo) the Chief Financial Officer of the company believes a more realistic scenario would be a $1,500,000 Increase in sales, requiring a 75,000 increase in average operating assets, with a resulting $426,250 increase in net operating income. What would be the mpany's ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) turn on investment (RON) Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $490,000 on sales of $1.200,000. The company's average operating assets for the year were $1,400,000 and its minimum required rate of return was 15% Required: Compute the company's residual income for the year. Residual income Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division Division B Division c Sales $ 12,690,000 $ 14,805,000 $ 26,437,500 Average operating assets $ 3,172,500 $ 7,402, 500 $ 5,287,500 Net operating income $ 634,500 $ 592,200 $ 846,000 Minimum required rate of return 148 105 168 Required: 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 Reg 2 Req Req 3B Compute the return on investment (ROI) 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.) Margin ROI Division A Turnover % % Division B Division C % Req 2 > Compute the residual income (loss) for each division. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Division A Division B Division C Residual income (loss) Req 1 Reg 2 Reg 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C Reg 1 Reg 2 Req Reg 38 Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C
