Exerclse $10\mathrm{.}12($Algo$)$ Evaluating New Investments Using Return on Investment $($ROI$)$ and Residual

Income $[$L$010-1,$ LO$10-2]$

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

Required:

Compute the return on Investment $($ROl$)$ for each dlvislon using the formula stated in terms of margin and turnover.

Compute the residual Income $($loss$)$ for each division.

Assume that each division is presented with an Investment opportunity that would yleld a $15\%$ rate of return.

a$.$ If performance is beling measured by ROI, which dlvision 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.

Req $2$

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

indicated by a minus sign.$)$