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Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.26 percent. Selected operating data for the three divisions
Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.26 percent. Selected operating data for the three divisions follow:
Peak | View | Grand | ||||
Sales revenue | $ | 330,000 | $ | 238,000 | $ | 309,000 |
Cost of goods sold | 216,000 | 112,000 | 183,000 | |||
Miscellaneous operating expenses | 37,000 | 35,000 | 36,000 | |||
Average invested assets | 1,360,000 | 880,000 | 1,115,000 | |||
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%.)) 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.)
Peak View Grand Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets $330,000 $ 238,000 $ 309,000 183,000 36,000 880,000 1,115,000 216,000 37,000 112,000 35,000 1,360,000Step by Step Solution
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