Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions The four divisional managers are evaluated at year end, and bonuses are awarded based on ROI Last year, the company as a whole produced a 13 percent return on its investment During the past week, management of the companys Western Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities (If the competitor is acquired, it will be acquired at its book value ) The data that follow relate to recent performance of the Western Division and the competitor Western Division Competitor Sales $ 4,220,000 $ 2,620,000 Variable costs 70 of sales 60 of sales Fixed costs $ 1,079,000 $ 970,000 Invested capital $ 850,000 $ 300,000 Management has determined that in order to upgrade the competitor to Megatronics standards, an additional $187,500 of invested capital would be needed 1 Compute the current ROI of the Western Division and the divisions ROI if the competitor is acquired (Round your Percentage answer to 2 decimal places (i e , 1234 should be entered as 12 34) 2 a Compute the ROI of the competitor as it is now and after the intended upgrade (Round your ROI to 2 decimal places (i e , 1234 should be entered as 12 34) ) 2 b If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the competitor 3 Calculate the Western Division's ROI after acquisition of competitor but before upgrading (Round your Percentage answer to 2 decimal places (i e , 1234 should be entered as 12 34) )

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Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are

Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company as a whole produced a 13 percent return on its investment.

During the past week, management of the companys Western Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the Western Division and the competitor:

	Western Division			Competitor
Sales	$	4,220,000		$	2,620,000
Variable costs		70	% of sales		60	% of sales
Fixed costs	$	1,079,000		$	970,000
Invested capital	$	850,000		$	300,000

Management has determined that in order to upgrade the competitor to Megatronics standards, an additional $187,500 of invested capital would be needed.

Compute the current ROI of the Western Division and the divisions ROI if the competitor is acquired.(Round your "Percentage" answer to 2 decimal places (i.e., .1234 should be entered as 12.34).

2-a.	Compute the ROI of the competitor as it is now and after the intended upgrade. (Round your ROI to 2 decimal places (i.e., .1234 should be entered as 12.34).)

2-b.

If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the competitor?

3. Calculate the Western Division's ROI after acquisition of competitor but before upgrading. (Round your "Percentage" answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)