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Furniture Division: begin{tabular}{lrr} & multicolumn{1}{c}{ Year 1 } & multicolumn{1}{c}{ Year 2 } hline Sales & $35,400,000 & $38,500,000 Operating income & 1,350,000
Furniture Division: \begin{tabular}{lrr} & \multicolumn{1}{c}{ Year 1 } & \multicolumn{1}{c}{ Year 2 } \\ \hline Sales & $35,400,000 & $38,500,000 \\ Operating income & 1,350,000 & 1,580,000 \\ Average operating assets & 2,830,000 & 2,830,000 \end{tabular} Houseware Division: \begin{tabular}{lrr} & \multicolumn{1}{c}{ Year 1 } & \multicolumn{1}{c}{ Year 2 } \\ \hline Sales & $11,900,000 & $12,900,000 \\ Operating income & 670,000 & 500,000 \\ Average operating assets & 5,900,000 & 5,900,000 \end{tabular} that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: \begin{tabular}{lrr} & Espresso-Pro & Mini-Prep \\ \hline Operating income & $28,000 & $15,400 \\ Outlay & 240,000 & 190,000 \end{tabular} Required: Round your answers to four decimal places before converting to a percentage. For example, .06349 would be rounded to .0635 and entered as "6.35" percent. 1. Compute the ROI for each investment. Espresso-Pro ROI Mini-Prep ROI 2. Compute the divisional ROI for each of the following four alternatives: a. The Espresso-Pro is added. % b. The Mini-Prep is added. c. Both investments are added. d. Neither investment is made; the status quo is maintained. Assuming that divisional managers are evaluated and rewarded on the basis of ROI performance, which alternative do you think the divisional manager will choose
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