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Finch Technologies, Incorporated has three divisions. Finch has a desired rate of return of 12.0 percent. The operating assets and income for each division are
Finch Technologies, Incorporated has three divisions. Finch has a desired rate of return of 12.0 percent. The operating assets and income for each division are as follows: Divisions Printer Copier Fax Operating Assets $ 600,000 870,000 420,000 Operating Income $ 102,000 99,180 60,060 Total $ 1,890,000 $ 261,240 Finch headquarters has $126,000 of additional cash to invest in one of its divisions. The division managers have identified Investment opportunities that are expected to yield the following ROIs: Divisions Printer Expected ROIs for Additional Investments 13.5 X Copier 12.5% Fax Required 11.5% a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $126,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $126,000 of investment funds? d. Which division offers the best investment opportunity for Finch? g. Calculate the residual income: Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the ROI for each division. Note: Round your percentage answers to 1 decimal place. (.e., 0.234 should be entered as 23.4). ROI Printer Division Copier Division Fax Division % % Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the residual income at the corporate (headquarters) level before the additional Investment. Residual income Complete this question by entering your answers in the tabs below. Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the residual income: Note: Loss amounts should be indicated by a minus sign. (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. (2) Printer division (2) Copier division (2) Fax division (3) Printer division (3) Copier division (3) Fax division (4) Printer division (4) Copier division (4) Fax division Residual Income (loss)
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