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M10-10 (Algo) Impact of New Investment on ROI, Residual Income (LO 10-4, 10-5] The Western Division of Claremont Company had net operating income of $142,000
M10-10 (Algo) Impact of New Investment on ROI, Residual Income (LO 10-4, 10-5] The Western Division of Claremont Company had net operating income of $142,000 and average invested assets of $552,000. Claremont has a required rate of return of 14.25 percent. Western has an opportunity to increase operating income by $35,000 with a $82,000 investment in assets. Compute Western Division's return on investment and residual income currently and if it undertakes the project. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answers to the nearest whole dollar.) Current Proposed Project 25.73% % Return on Investment (ROI) Residual Income (Loss)
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