Question
Eban Wares is a division of a major corporation. The following data are for the latest year of operations. Sales of 10,000,000, Net operating income
Eban Wares is a division of a major corporation. The following data are for the latest year of operations. Sales of 10,000,000, Net operating income of 950,000, average operating assets of 4,000,000 and the company inimum required rate of return is 14%. The manager of Eban Wares has an opportunity to add a project with the following characteristcs: cost of new equipment of 1,200,000, additional revenues of 3,000,000, and additional expenses of 2,100,000.
a) what is the division's margin (before the new project)?
b) what is the division's turnover (before the new project)?
c) what is the division's return on investment (ROI) (before the new project)?
d) what is the division's resifual income (before the new project)?
e) what is the division's margin (after the new project is added)?
f) what is the division's turnover (after the new project is added)?
g) what is the division's return on investment (ROI) (after the new project is added)?
h) what is the division's residual income (after the new project is added)?
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