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Please help PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment, Residual Income [LO 10-4, 10-5) Wescott Company has three divisions. A.
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PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment, Residual Income [LO 10-4, 10-5) Wescott Company has three divisions. A. B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Division A Division Division Sales revenue $ 1,275,000 $ 996,000 $ 986,000 Cost of goods sold 788,000 731,000 716,000 Miscellaneous operating expenses 63,000 56,000 57,000 Interest and taxes 52.000 45,000 45,000 Average invested assets 3,992,000 2,118,000 3,485,000 Wescott is considering an expansion project in the upcoming year that will cost $5.4 million and return $488,000 per year. The project would be implemented by only one of the three divisions 1. Compute the ROI for each division 2. Compute the residual income for each division 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI 6. Compute the new ROI and residual income for each division if the project was implemented within that division. Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req3 Reg 4A Req 48 Reg 5 Req 6 Compute the ROI for each division. (Do not round your intermediate calculations. Round your percentage answer to 2 decimal places, (ie. 0.1234 should be entered as 12.34%.)) ROI % Division A Division B Division C 96 9 1. Compute the ROI for each division 2. Compute the residual income for each division. 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. 6. Compute the new ROI and residual income for each division if the project was implemented within that division Complete this question by entering your answers in the tabs below. Reqi Req? Reg 3 Reg 4A Reg 4B Reg 5 Reg 6 Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.) Residual income (Loss) Division A Division B Division C 1. Compute the ROI for each division 2. Compute the residual income for each division 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI 6. Compute the new ROI and residual income for each division if the project was implemented within that division. Complete this question by entering your answers in the tabs below. Reqs Reg 6 Red Reg 2 Ie 3 Reg 4 Req 43 Rank the divisions according to the ROI and residual income of each. Rank Division A Division B Division C 1. Compute the ROI for each division 2. Compute the residual income for each division 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROL 6. Compute the new ROI and residual income for each division if the project was implemented within that division Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 4A Req 48 Reg 5 Reg 6 Compute the return on investment on the proposed expansion project. (Round your percentage answer to 2 decimal places, (.e. 0.1234 should be entered as 12.34%) Return on Investment of Proposed Expansion Project % 1. Compute the ROI for each division 2. Compute the residual income for each division 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROL 6. Compute the new ROI and residual income for each division if the project was implemented within that division Complete this question by entering your answers in the tabs below. Req Reg2 Regs Reg 4 Req4B RET Req6 without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. Division A Division B Division C 3. Rank the divisions according to the ROI and residual income of each 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI 6. Compute the new ROI and residual income for each division if the project was implemented within that division Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Req 48 Reqs Reg 6 Compute the new ROI and residual income for each division if the project was implemented within that division. (Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to 2 decimal places, (:, 0.1234 should be entered as 12.34%.)) Residual ROI Income (Loss) Division A Division B Division C Step by Step Solution
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