Osborne Ceramics, a division of Sweeney Corporation, has an operating income of $63,000 and total asseta of 5420,000 . The required mate of return for the comipany is 10 Th. The company is evaluating whether in should use fetum on investment (ROl) or residual income (R) as a measurement of pirformance for its division manogers. The manager of Osbome Ceramics has the opportunity to undertake a new project that will require an imestment of $140,000. This imestment would earn $18,200 lor the company Read the teguirements Requirement 1. What is the onginol retum on imvedment (ROI) foc Onbome Ceramics (bofore making any additional investment)? First ontermine the formula to caloulate the RO. Requirements 1. What is the original return on investment (ROI) for Osborne Ceramics (before making any additional investment)? 2. What would the ROI be for Osborne Ceramics if this investment opportunity were undertaken? Would the manager of the Osborne Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Sweeney Corporation? Why or why not? 4. What would the residual income (RI) be for Osborne Ceramics if this investment opportunity were to be undertaken? Would the manager of the Osborne Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sweeney Corporation? Why or why not? 6. Which performance measurement method, ROl or RI, promotes goal congruence? Why? Osborne Ceramics, a division of Sweeney Corporation, has an operating income of $63,000 and total asseta of 5420,000 . The required mate of return for the comipany is 10 Th. The company is evaluating whether in should use fetum on investment (ROl) or residual income (R) as a measurement of pirformance for its division manogers. The manager of Osbome Ceramics has the opportunity to undertake a new project that will require an imestment of $140,000. This imestment would earn $18,200 lor the company Read the teguirements Requirement 1. What is the onginol retum on imvedment (ROI) foc Onbome Ceramics (bofore making any additional investment)? First ontermine the formula to caloulate the RO. Requirements 1. What is the original return on investment (ROI) for Osborne Ceramics (before making any additional investment)? 2. What would the ROI be for Osborne Ceramics if this investment opportunity were undertaken? Would the manager of the Osborne Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Sweeney Corporation? Why or why not? 4. What would the residual income (RI) be for Osborne Ceramics if this investment opportunity were to be undertaken? Would the manager of the Osborne Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sweeney Corporation? Why or why not? 6. Which performance measurement method, ROl or RI, promotes goal congruence? Why
