Question
Need answers to three question. I only have half of the answers correct. Can you please help. ROI and Residual Income:Basic Computations Watkins Associated Industries
Need answers to three question. I only have half of the answers correct. Can you please help.
ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow.
Trucking DivisionSeafood DivisionConstruction DivisionSales$1,000,000$690,000$900,000Operating assets500,000230,000380,000Net operating income99,00058,00057,000
(a) Compute the return on investment for each division. (Round answers to three decimal places.)
Trucking ROI =Answer
Seafood ROI =Answer
Construction ROI =Answer
(b) Compute the residual income for each division.Residual IncomeTruckingSeafoodConstructionNet operating income$Answer
Minimum levelAnswer :
Residual income$Answer:
QUESTION2Partially correct2.00 points out of 4.00Flag question
Question textROI and Residual Income:
Impact of a New Investment
The Mustang Division of Detroit Motors had an operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent.
(a) Compute the return on investment. (Round your answer to three decimal places.)
Answer
(b) Compute the residual income.
$Answer
(c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $950,000 investment in assets.
1. Compute the Mustang Division's return on investment if the project is undertaken. (Round your answer to three decimal places.)
Answer
2. Compute the Mustang Division's residual income if the project is undertaken.
$Answer
QUESTION3 Partially correct1.00 points out of 2.00Flag question
Question text
NPV and IRR: Unequal Annual Net Cash Inflows
Assume that Goodrich Petroleum Corporation is evaluating a capital expenditure proposal that has the following predicted cash flows:
Initial Investment$(48,660)OperationYear 116,000Year 226,000Year 321,000Salvage0
a. Using a discount rate of 10 percent, determine the net present value of the investment proposal.
$Answer
(Round answer to the nearest whole number.)b. Determine the proposal's internal rate of return. (Refer to Appendix 12B if you use the table approach.)
Round to the nearest percent. (Example: 0.15268 = 15%)
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