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Common Investments has two divisions. Each division's required rate of return is 1 5 % . Planned operating results for 2 0 2 0 are
Common Investments has two divisions. Each division's required rate of return is Planned operating results for are as follows:
Requirement a What is the current ROI for each division?
Begin by selecting the formula to calculate ROI, then compute the ROI for each division.
Requirement b What is the current residual income for each division?
Begin by selecting the formula to calculate the residual income RI then compute the RI for each division.
tableRIDivision ADivision B
Requirement c Common is planning an expansion that will require each division to increase its investments by $ and its income by $ Assuming the managers are evaluated on either ROI or residual income, which division if either is pleased with the expansion?
Begin by calculating the revised ROI and RI for each division. Round each percentage to the nearest tenth percent, XX
tableROI,RIDivision ADivision B
When considering residual income,
the expansion. When ROI is considered,
the
expansion.
Data table
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