Exercise 10-12 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: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 6,100,000 $ 1,525,000 $ 317,200 15.00% Division B $ 10,1ee, eee $ 5,950, eee $ 929, 200 18.40% Division C $ 9, 2ee, 800 $ 2,300,eee $ 225,400 12.eex 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 17% 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. Req1 Reg 2 Reg 3A Req 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 2 decimal places.) Margin Turnover ROI % Division A Division Division C % % % % Hog Reg 2 > Complete this question by entering your answers in the tabs below. Reg 1 Roq 2 Reg JA Reg 38 Compute the residual income (loss) for each division (Do not found intermediate calculations. Loss amounts should be indicated by a minus sign) Division A Division B Residual income (ona Division Reg1 Req3A > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 17% 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 C Complete this question by entering your answers in the tabs below. Reg2 Red A Re 35 Assume that each division is presented with an investment opportunity that would vield a 17 rate of return. Il performance is being treasured by residual income, which division of dividone will probably accept or reject the opportunity? Division A Oslon Division Req3A