North American Beverage Corporation is a highly innovative pacesetter in the changing soft drink industry. Following is financial data for each of the corporation' three divisions: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 5,600,000 $ 1,120,000 $ 263,200 16.00% Division B $ 9,600,000 $ 3,200,000 $ 835,200 26.108 Division c $ 8,700,000 $ 1,740,000 $ 169,650 13.008 Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover ROI % % Division A Division B Division C % % % % North American Beverage Corporation is a highly innovative pacesetter in the changing soft drink industry. Following is financial data for each of the corporation' three divisions: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 5,600,000 $ 1,120,000 $ 263,200 16.00% Division B $ 9,600,000 $ 3,200,000 $ 835,200 26.108 Division c $ 8,700,000 $ 1,740,000 $ 169,650 13.00% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Compute the residual income (loss) for each division. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Division A Division B Division C Residual income (loss) North American Beverage Corporation is a highly innovative pacesetter in the changing soft drink industry. Following is financial data for each of the corporation' three divisions: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 5,600,000 $ 1,120,000 $ 263,200 16.008 Division B $ 9,600,000 $ 3,200,000 $ 835,200 26.10% Division c $ 8,700,000 $ 1,740,000 $ 169,650 13.008 Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req Req 3B Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A Division B Division North American Beverage Corporation is a highly innovative pacesetter in the changing soft drink industry. Following is financial data for each of the corporation' three divisions: Sales Average operating assets Net operating income Minimum required rate of return Division A $ 5,600,000 $ 1,120,000 $ 263,200 16.008 Division B $ 9,600,000 $ 3,200,000 $ 835,200 26.10% Division c $ 8,700,000 $ 1,740,000 $ 169,650 13.00% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req Req 3B Assume that each division is presented with an investment opportunity that would yield a 18% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C
