indicate completion. Return to question Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI Last year, the company as a whole produced a 14 percent bturn on its investment During the past week, management of the company's Northeast Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value) The data that follow relate to recent performance of the Northeast Division and the competitor Competitor Sales Variable costs Fixed costs Invested capital Northeast Division $4,300,000 $2,710,000 75% of sales 70% of sales $ 877,000 $1,100,000 $725,000 $ 400,000 Management has determined that in order to upgrade the competitor to Megatronics' standards, an additional $150,000 of invested capital would be needed. Required: 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired 2. If divisional management is being evaluated on the basis of ROI, will the Northeast Division likelv pursue acquisition of the Prey 1 of 1 Next > 112 Return Management has determined that in order to upgrade the competitor to Megatronics' standards, an additional $150,000 of inv capital would be needed. Required: 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired. 2. If divisional management is being evaluated on the basis of ROI, will the Northeast Division likely pursue acquisition of the competitor? 3-a. Compute the ROI of the competitor as it is now and after the intended upgrade. 3-b. If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the compe 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum return on inve capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is am 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely pursue acqu the competitor? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. C 190 aw 11 Req By entering your answers in the tabs below Req 2 Req 3A Req 3B Req 4 Compute the current ROI of the Northeast Division and the division's ROI if to 2 decimal places (i.e., .1234 should be entered as 12.34).) Current ROI 18.00 % ROI if competitor is acquired 17.11 % Req 1 Prev 1 of 1 Req 2 Mc entering your answers in the Req 1 Req 2 Req 3A Req 3B Req Compute the ROI of the competitor as it is now and after the inte ROI before upgrading ROI after upgrading 22 % 15 x % < Req 2 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely the competitor? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 38 Req 4 Req 5A Req 5B Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. (Round your answer to 2 de places (i.e., .1234 should be entered as 12.34).) ROI 18.89 % Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 38 Req 4 Req 5A Req 5B Assume that Megatronics uses residual income to evaluate performance and desires a 12 percent minimum retu capital. Compute the current residual income of the Northeast Division and the division's residual income if the c acquired. Current residual income $ 63,000 Residual income if competitor is acquired $ 76,200 www Prev 1 of 1 Next