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Isabelle Abiassi operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue Operating income Average assets
Isabelle Abiassi operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue Operating income Average assets $7.560,000 $664,500 $3,792,000 The camp's weighted average cost of capital is 9%, and Isabelle requires that all new investments generate a return on investment of at least 13%. The camp's current tax rate is 25% At last week's advisory board meeting, Isabelle told the board that she had up to $50,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the board's president presented Isabelle with the following list of three potential investments to improve the camp facilities. Incremental operating income Average total assets Playground $3,341 25,700 Swimming Pool $3.438 38.200 Gym $ 1.974 14,100 Calculate the return on investment, residual income, and economic value added for each of the three projects. (Enter negative amounts using elther a negative sign preceding the number, eg.-45 or parentheses, e.g. (45). Round Economic Value Added answer to 2 decimal places, eg. 15.25 & all other answers to decimal places, eg. 15 or 15%) Playground Pool Gym Return on Investment Residual Income $ Economic Value Added $ e Textbook and Media Which of the three projects do you recommend Isabelle undertake
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