Munoz Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 106,080 Cost of goods sold 58,875 Gross margin 47,205 Operating expenses Selling expenses (2,660) Depreciation expense (4,115) Operating income 40.430 Nonoperating item Loss on sale of land (4,300) Net income $ 36, 130 BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Assets Cash Accounts receivable Merchandise inventory Equipment less accumulated depreciation Nonoperating assets Total assets Tibilities $ 12,602 40,276 36,600 90.448 9,200 $189, 126 Check $ 9,517 67,000 La GaL Liabilities Accounts payable Notes payable Stockholders' equity Common stock Retained earnings Total liabilities and stockholder's equity 72,000 40.609 $189,126 Required c. Calculate the ROI for Bowman. d. Munoz has a desired ROI of 13 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have investment opportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. 11 11 Required c. Calculate the ROI for Bowman. d. Munoz has a desired ROI of 13 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have investment opportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted by Bowman. e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. Complete this question by entering your answers in the tabs below. Required C Required D Required E Calculate the ROI for Bowman (Round your answer to 2 decimal places. (.e., 0.2345 should be entered as 23.45).) ROL Complete this question by entering your answers in the tabs below. Required C Required D Required E Munoz has a desired ROI of 13 percent. Headquarters has $86,000 of funds to assign to its investment centers. The manager of the Bowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have Investment opportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity Is adopted by Bowman. (Round your answer to 2 decinal places. Cie., 0.2345 should be entered as 23.45).) Show less New ROI Complete this question by entering your answers in the tabs below. Required C Required D Required E Based on the original data, calculate the original residual income. Also, calculate the new residual income based on information provided in Requirement d. (Round your final answer to nearest whole dollar.) Original residual income New residual income
