Good morning,

The attached is a copy of a question that I would like help with.

Many thanks,

D

Problem 5: The following information is available about the status and operations for Division A of Simplex Company, which has a minimum required ROA of 20%. Answer each item independently of the others. Required: a. Compute the ROA for Division A. b. Compute the residual income for Division A. c. Division A could increase its profit by $8,000 by increasing its investment by $30,000. Compute its total residual income. Hint two steps: First is to figure out the cost of the new asset base using 20% and then comparing to new profit base d. Division A could increase its profit margin ratio by one percentage point (for example: from 12% to 13%), without increasing total sales or investment. Compute its new ROA. e. Division A could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new ROA.. Hint: This is really easy if you follow the Dupont method