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i want answer for 4 a The company had an overall ROI of 70% last year (considering all divisions). The office products division has an
i want answer for 4 a
The company had an overall ROI of 70% last year (considering all divisions). The office products division has an opportunity to add a new product line that would require an additional investment in operating assets of $14,750,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales Less: Variable expenses Contribution margin Less: Fixed expenses Net operating income Divisional operating assets $147,500,000 110,625,000 36,875,000 29,500,000 $ 7,375,000 $ 59,000,000 4. Suppose that the company views a return of 6.5% on invested assets as being the minimum that any division should earn and that performance is evaluated by the RI approach. a. Compute the office products division's Rl for the most recent year; also compute the Rl as it would appear if the new product line were added. a. Compute the office products division's RI for the most recent year; also compute the Rl as it would appear if the new product line were added. Answer is complete but not entirely correct. Present New Line Total $ $ $5,900,000 3,540,000 2,360,000 RI
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