E10-8 Evaluating Managerial Performance Using Return on Investment, Residual Income [LO 10-4, 10-5]

Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.26 percent. Selected operating data for the three divisions follow:

		Peak		View		Grand
Sales revenue	$	332,000	$	220,000	$	317,000
Cost of goods sold		204,000		103,000		196,000
Miscellaneous operating expenses		41,000		37,000		32,000
Average invested assets		1,250,000		970,000		1,055,000

Required: 1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.)

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