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Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). (1.1) Compute return on investment
Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). (1.1) Compute return on investment for each department. (1.2) Using return on investment, which department is most efficient at using assets to generate returns for the company? Electronics Sporting goods (2.1) Assume a target income level of 12.4% of average invested assets. Compute residual income for each department. (2.2)Which department generated the most residual income for the company? Electronics Sporting goods Assume that the Electronics department is presented with a new investment opportunity that will yield a 15.7% return on assets. Should the new investment opportunity be accepted? No, the new investment opportunity should not be accepted Yes, the new investment opportunity should be accepted
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