Exercise 10-12 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division Division Division Sales $ 12,150,000 $14, 175,000 $ 25,312,500 Average operating assets $ 3.037.500 5 7,087,500 $ 5.062500 Net operating Income $607,500 $.567.000 $ 110,000 Minimum required rate of return 145 10% 16% Required: 1 Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover 2 Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return a If performance is being measured by ROI which division or divisions will probably accept or reject the opportunity b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 38 Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover (Do not round intermediate calculations. Round your answers to 1 decimal place) Margin Turnover ROU Division A Division B Division % Req 2 > Exercise 10-12 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division Divisto Division Sales $ 12.150.000 14,175.000 $ 25,312,500 Average operating assets 5 3,037.500 $ 7.037.00 $ 5,062,500 Net operating Income $607,500 $ 567.000 $10,000 Minimum required rate of return 14% 10 16% Required: 1 Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of tetur a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportu Complete this question by entering your answers in the tabs below. Red Reg 2 Red 3A Reg38 Compute the residual income (loss) for each division. (Do not round Intermediate calculations. Loss amounts should be Indicated by a minus sign) Division A Division B Division Residual income (loss) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Diviston Division Sales $ 12,150,000 314,175,000 $ 25, 312,500 Average operating assets $ 3,037,500 $ 7,087,500 5 5,062,500 Net operating income $ 607,500 $ 567.000 $ 310,000 Minimum required rate of return 10% 16% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 38 Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A Division B Division Selected sales and operating data for three divisions of different structural engineering firms are given as follows Division A Division Division c Sales 5 12.150,000 5 14,175,000 $ 25, 312,500 Average operating assets $3,037,500 $7,087,500 $ 5,062,500 Net operating income $ 607,500 $ 567,000 $ 310,000 Minimum required rate of return 10X 16% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and tumover. 2. Compute the residual income foss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportur Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Red 3A Reg 38 Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C
