Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Delby Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers' lots. Dolby expanded into
Delby Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers' lots. Dolby expanded into the precut housing market when it acquired Jensen Company, one of its suppliers. In this market various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers' lots for assembly. Delby designated the Jensen Division as an investment center. Delby uses return on investment (ROI) as a performance measure with investment defined as average operating assets. Management bonuses are based in part on ROl. All investments are expected to earn a minimum rate of return of 18%. Jensen's ROI has ranged from 20.1% to 23.5% since it was acquired. Jensen had an investment opportunity in 2014 that had an estimated ROI of 19.0%. Jensen management decided against the investment because it believed the investment would decrease the division's overall ROI. Selected financial information for Jensen are presented below. The division's average operating assets were 512,300.000 for the year 2014. Calculate the following performance measures for 2014 for the Jensen Division. (Round ROI to 1 decimal place>, e.g. 1.5%)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started