Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hawkins Ceramics, a division of Patherson Corporation, has an operating income of $71,000 and total assats of $420,000. The requirod rale of return for the
Hawkins Ceramics, a division of Patherson Corporation, has an operating income of $71,000 and total assats of $420,000. The requirod rale of return for the company is 13%. The company is evaluating whether it should use ROi or Ri as a measurement of performance for its division managers. The manager of Hawkins Ceramics has the opportunity to undertake a new project that will require an investmont of $104,000. This invostment would eam $21,000 for Hawkins Ceramics. Requirements Requirement 1. What is the original ROI for Hawkins Ceramics (before making any additonal imvestinent)? First, select the tabeis to complete the formula for the return on investment, ROI a division of Patterson Corporation, has an operating income of $71,000 and total assets of $420,000. The required ral it should use ROI or RI as a measurement of performance for its division managers. awkins Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investr Requirements 1. What is the original ROI for Hawkins Ceramics (before making any additional investment)? 2. What would the ROI be for Hawkins Ceramics if this investment opportunity were undertaken? Would the manager of the Hawkins Ceramics division want to make this investment if she evaluated it based on ROI? Why or why not? 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Patterson Corporation? Why or why not? 4. What would the RI be for Hawkins Ceramics if this investment opportunity were undertaken? Would the manager of the Hawkins Ceramics division want to make this investment if she evaluated it based on RI? Why or why not? 5. What is the Rl of the investment. opportunity? Would the investment be desirable from the standpoint of Patterson Corporation? Why or why not? 6. Which performance measurement method, ROI or RI, promotes goal congruence? Why
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started