Question
Hubbard Division of the Market Company has an opportunity to invest in a new project. The project will yield an incremental operating income of $40,750
Hubbard Division of the Market Company has an opportunity to invest in a new project. The project will yield an incremental operating income of $40,750 on average invested assets of $455,000. Hubbard currently has operating income of $200,000 on average invested assets of $2,015,000. Market Company requires a 5% rate of return on new projects. a. What is Hubbards ROI before making an investment in the project? (Round your answer to 2 decimal places.) b. What is Hubbards residual income before making an investment in the project? c. What is Hubbards ROI after making the investment in the project? (Round your answer to 2 decimal places.) d. What is Hubbards residual income after making the investment in the project?
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