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Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.01 percent. Selected operating data for the three divisions
Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.01 percent. Selected operating data for the three divisions follow:
Peak | View | Grand | ||||
Sales revenue | $ | 328,000 | $ | 229,000 | $ | 306,000 |
Cost of goods sold | 215,000 | 113,000 | 193,000 | |||
Miscellaneous operating expenses | 45,000 | 34,000 | 40,000 | |||
Average invested assets | 1,240,000 | 900,000 | 1,225,000 | |||
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Required: 1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
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2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.)
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