Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions, The four divisional managers are evaluated at yearend, and bonuses are awarded based on RO1. Last year, the company as a whicke produced a 14 percent return on its investment. During the past week, management of the company's Northeast Division was approached about the possibility of buying a competior that had decided to redirect its retail activities. of the competitor is acquired, it will be acquired at its book value.) The dota that follow relate to recent performance of the Northeast Division and the competitor: Management has determined that in order to upgrede the competitor to Megatronics" standards, an additional $171,000 of invested capital would be needed. Required: 1. Compute the current ROI of the Northeast Division and the division's ROI if the competitor is acquired. 2. If divisional management is being evaluated on the basis of ROU, will the Northeast Division likely pursue acquisition of the competitor? 3-a. Compute the ROI of the competitor as it is now and after the intended upgrade. 3-b. If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the competitor? 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 10 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired. 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely pursue acquisition of the competitor? Complete this question by entering your answers in the tabs below. competitor? 3-a. Compute the ROI of the competitor as it is now and after the intended upgrade. 3-b. If ROI is used as the basis for evaluation. would Megatronics Corporation likely be in favor of the acquisition of the competitor? 4. Calculate the Northeast. Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residuat income to evaluate performance and desires a 10 percent minimum foturn on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired. 5-b. If divisional management is being cvaluated on the basis of residual income, will the Northeast Division likely pursue acquisition of the competitor? Complete this question by entering your answers in the tabs below. Compute the current ROl of the Northeast Division and the division's ROl if the competitor is atcquired. (Round your answers to 2 decimal places (i.e.4 1234 should be entered as 12.34).) 2. If divisional management is being evaluated on the basis of ROI, Will the Northeast Division likely pursue acquisition of the competitor? 3-a. Compute the ROI of the compotitor as it is now and after the intended upgrade. 3-b. If ROI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the competitor? 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 10 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired. 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely pursue acquisition of the competitor? Complete this question by entering your answers in the tabs below. Compute the RO1 of the competitor as it is now and after the intended upgrade. 3-b. It RUI is used as the basis for evaluation, would Megatronics Corporation likely be in favor of the acquisition of the competit 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 10 percent minimum return on invesi capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acc 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely pursue acquis the competitor? Complete this question by entering your answers in the tabs below. Calculate the Northeast Division's ROI after accuisition of competitor but before upgrading. (Round your answer to 2 decimal places (1.e., .1234 should be entered as 12.34).) 4. Calculate the Northeast Division's ROI after acquisition of competitor but before upgrading. 5-a. Assume that Megatronics uses residual income to evaluate performance and desires a 10 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquilistion 5-b. If divisional management is being evaluated on the basis of residual income, will the Northeast Division likely pursue acquisiti the competitor? Complete this question by entering your answers in the tabs below. Assume that Megatronics uses residual income to evaluate performance and desires a 10 percent minimum return on invested capital. Compute the current residual income of the Northeast Division and the division's residual income if the competitor is acquired
