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   ROI and Investment Decisions

   Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division.

   Frozen Foods Division:
   	Year 1	Year 2
   Sales	$36,000,000	$38,500,000
   Operating income	1,350,000	1,520,000
   Average operating assets	6,470,000	6,470,000

   Canned Foods Division:
   	Year 1	Year 2
   Sales	$11,800,000	$12,800,000
   Operating income	610,000	540,000
   Average operating assets	5,500,000	5,500,000

   At the end of Year 2, the manager of the Canned Foods Division is concerned about the division's performance. As a result, he is considering the opportunity to invest in two independent projects. The first is juice boxes for elementary school children. The second is fruit and veggie pouches for kids on the go. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows:

   	Juice Box	Fruit Pouch
   Operating income	$28,000	$15,500
   Outlay	250,000	200,000

   Allard's corporate headquarters has made available up to $500,000 of capital for this division. Any funds not invested by the division will be retained by headquarters and invested to earn the company's minimum required rate of return, 8 percent.

   Required:

   Round your answers to four decimal places before converting to a percentage. For example, .06349 would be rounded to .0635 and entered as "6.35" percent.

   1. Compute the ROI for each investment.

   Juice Box ROI	fill in the blank 1 %
   Fruit Pouch ROI	fill in the blank 2 %

   2. Compute the divisional ROI for each of the following four alternatives:

   a. The juice box is added. fill in the blank 3 %

   b. The fruit pouch is added. fill in the blank 4 %

   c. Both investments are added. fill in the blank 5 %

   d. Neither investment is made; the status quo is maintained. fill in the blank 6 %

   Assuming that divisional managers are evaluated and rewarded on the basis of ROI performance, which alternative do you think the divisional manager will choose?

   Juice BoxFruit PouchBoth ProjectsStatus QuoJuice Box

   3. Which of the data analytic typesdescriptive, diagnostic, predictive or prescriptiveis used in determining which, if any, new investment to make?

   DescriptiveDiagnosticPredictivePrescriptivePredictive