O Problem 25.1A (Algo) Empire Hotel (LO25-2, LO25-3, LO25-4) The Eppire Hotel is a full-service hotel in a large city. Empire is organized into three departments that are treated as investment cente Budget information for the coming year for these three departments is shown as follows. The managers of each of the departments are evaluated and bonuses are awarded each year based on ROL Average investment Operating earning tapire l 7,653,000 $10,000,000 8,431,000 $2,000,00 1,333,00 Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment b-1. What would be the ROI of investment in the new exercise equipment and Health Spa b-2. Would the manager of the Heath Spa be motivated to undertake such an investment? 1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent e-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. C What would be the impact of the investment on the Health Spa's real income gf points centers. Budget information for the coming year for these three departments is shown as follows. The managers of each of the Vice hotel in a large city. Empire is organized into three departments that are treated as investment departments are evaluated and bonuses are awarded each year based on RO Book Average investment Sales reven Operating expens Operating earnings Print Required: References Empire Botel Botel Rooms Sealth Spe 7,553,000 14,155,000 $1,246,000 $10,000,000 8,491,000 1,509,000 $2,000,000 1,133,000 $400,000 413,000 a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating eamings would increase by $8.000 per year as a result of the new equipment b-1. What would be the ROE of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? e-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req A Reg 01 Req 82 Reg Cl Reg C2 What would be the ROI of investment in the new exercise equipment and Health Spa? (Round your percentage answers to 2 decimal places (ie., 0.1234 should be considered as 12.34.)) Exercise Equipment Health Spa RO Book Print $ 7,653,000 $4,755,000 $1,246,000 Sales revenue $10,000,000 $2,000,000 $600,000 Operating expenses Operating earnings 8,491,000 $1,509,000 1,333,000 $667,000 412,000 $188,000 Required: eferences a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment. b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req A Req 81 Req B2 Req C Req C2 Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. (Loss amounts should be indicated with a minus sign.) Departments Residual Incom+ (loss) Hotel Rooms Restaurants Health Spa Ren R2. Reg C2 Annina un nun in esenunn nun nan undan Average investment Sales revenue Operating expenses Operating earnings Empire Hotel Hotel Rooms $ 7,653,000 $10,000,000 8,491,000 $ 1,509,000 Restaurants $4,755,000 $2,000,000 Health Spa $1,246,000 1,333,000 $ 600,000 412,000 $ 667,000 $ 188,000 Help Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment. b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req C1 Req C2 What would be the impact of the investment on the Health Spa's residual income? Impact of the investment Reg C2 Decrease in residual income Decrease in residual loss Increase in residual income Increase in residual loss