Exerclse $10-12($Algo$)$ Evaluating New Investments Using Return on Investment $($ROI$)$ and Residual

Income $[$LO$10-1,$ LO$10-2]$

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Requlred:

Compute the return on investment $(RO)$ for each division using the formula stated in terms of margin and turnover.

$2$ Compute the residual income $($loss$)$ for each division.

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.

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.$)$

Complete this question by entering your answers in the tabs below.

Compute the residual income $($loss$)$ for each division. $($Do not round intermediate calculations. Loss amounts should be

indicated by a minus sign.$)$

$$ Req $1$

Complete this question by entering your answers in the tabs below.

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?

Complete this question by entering your answers in the tabs below.

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?