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Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division: Fruit Division Flower Division Sales

Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:

Fruit Division Flower Division
Sales revenue $ 1,560,000 $ 2,340,000
Cost of goods sold and operating expenses 1,170,000 1,755,000
Net operating income $ 390,000 $ 585,000
Average invested assets $ 4,875,000 $ 2,437,500

1-a. Compute each divisions return on investment (ROI) and residual income for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

Fruit Division Flower Division
ROI % %
Residual Income (Loss)

1-b. Determine which manager seems to be performing better.

Fruit Division
Flower Division

2. Suppose Orange is investing in new technology that will increase each divisions operating income by $125,000. The total investment required is $2,000,000, which will be split evenly between the two divisions. Calculate the ROI and return on investment for each division after the investment is made. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))

Fruit Division Flower Division
ROI % %
Residual Income (Loss)

3. Which manager will accept the investment.

Fruit Division Manager
Flower Division Manager

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