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please help with requirements 2-6 Stenback Cerarrics, a division of Sesnio Corporation, has an operating income of $78,000 and total assets of $416,000. The required
please help with requirements 2-6
Stenback Cerarrics, a division of Sesnio Corporation, has an operating income of $78,000 and total assets of $416,000. The required rate of return for the company is 14%. The company is opporturity to undertake a new project that wit require an investment of $104,000. This investment would earn $15,600 for the company. Read the requirements Requirement 1. What is the original retum on irvestment (RO) for Stenback Ceramics (belore making any adotional investment)? First determine the formula to calculate the ROI. Operating income Total assets. ROI (Enter the percentage to two decimal ploces) The ofighat retum on imvestment (ROA) for Stenback Ceranics is \%. Requirement 2. What would the ROI be for Stenback Ceramics if this invetment epportunity were undertaken? Would the manager of the stenback Ceramics division want to make ths investrent if she wore evaluated based on ROI? Why or why not? (Enter the percentage to two decimal places.) If this investment opportunity were undertaken, the Rol would be Requirements 1. What is the original return on investment (ROI) for Stenback Ceramics (before making any additional investment)? 2. What would the ROI be for Stenback Ceramics if this investment opportunity were undertaken? Would the manager of the Stenback 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 Sesnie Corporation? Why or why not? 4. What would the residual income (RI) be for Stenback Ceramics if this investment opportunity were to be undertaken? Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the Rl of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? 6. Which performance measurement method, ROI or RI, promotes goal congruence? Why Step by Step Solution
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