Homework: HW #8-Chapter 10 Save Score: 0.67 of 1 pt 47 of 9 (7 complete) HW Score: 66.67%, 6.67 of 10 pts E10-23A (similar to) Question Help Stenback Ceramics, a d is on of Sesne Corporation, has an operating income o78,000 and total assets o $416,000 The required rate o return for the company $ 1 %. The oompany is evaluating whether it should use etun on investment (ROl) or residual income (R) as a measurement of performance for its division managers. The manager of Stenback Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investment would earn S15,600 for the company, Read the requirements. Requirements If the manager of thls divislon Is evaluated based on ROl she would not want to make this investment. I Requirement 3. What is the ROI of the investment opportunity? Would the investment be desirable from the The ROl of the investment opportunity is From the standpoint of Sesnle Corporation this investment isdesirable. The ROl of the investment o Requirement 4. What would the residual inoome (RI) be for Stenback Ceramics if this investment apportun 1. What is the original return on investment (ROl) for Stenback Ceramics before making any additional investment)? 2. What would the ROI be for Stenback Ceramics if this investment opportunity were undertaken? 15 %. Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on ROl? Why or why not? standpoint of Sesnie Corporation? Why or why not? were to he undertaken? Would the manager of the Stenback Ceramics division want to make this 3. Whar is the ROl of the investment opportunity? Wauld the investment he desirable from the 4. What would the residual income (R) be for Stenback Ceramics if this investment opportunity were evaluated based on RI? Why or why not? First deterrrine the formula to calculate the RI investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable from the Opcrating Income (Use parentheses or a minus sign for a negative RI.) The residual income (RI) for Stenback Ceramics if this investment opportunity were to be undertaken is S If the manager of this division is evaluated based on Rl she would want to make this investment. The Requirement 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? (Use parentheses or a minus sign for a negative RI.) The RI of the investment opportunity is$ Total assets xTarget rate of returnRI standpoint of Sesnie Corporation? Why or why not? 6. Which performance measurement method, ROl or RI, promotes goal congruence? Why? Print Done Enter any number in the edit fields and then click Check
