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PART 2 Assume the manager of Division B at Rainy Days Inc. has an investment opportunity with a rate of return (ROR) of 24%. Required:

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PART 2 Assume the manager of Division B at Rainy Days Inc. has an investment opportunity with a rate of return (ROR) of 24%. Required: Using the information from PART 1 above, state whether the manager would accept or reject this investment opportunity, and why, if: a. The manager is being evaluated based on return on investment (ROI). (2 marks) b. The manager is being evaluated based on residual income (RI). (2 marks) Question 7 (4 points) PART 2 Assume the manager of Division B at Rainy Days Inc. has an investment opportunity with a rate of return (ROR) of 24%. Required: Using the information from PART 1 above, state whether the manager would accept or reject this investment opportunity, and why, if: a. The manager is being evaluated based on return on investment (ROI). (2 marks) b. The manager is being evaluated based on residual income (RI). (2 marks) Question 6 (2 points) PART1 Rainy Days Inc. has assembled the following data for one of its divisions for the past year Division B Sales $350,000 Variable expenses 25% of sales Fixed expenses $200,000 Average operating assets $250 000 Current return on investment 25.0% Minimum Required Rate of Return 210% Required: Calculate the residual income for Division B Enter your answer below with no dollar sign no comma and round to the nearest dollar. (2 marks) Your Answer: Answer Question 7 (4 points)

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