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PLEASE JUST SOLVE #6 I added all of the other parts for help! PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment,
PLEASE JUST SOLVE #6
I added all of the other parts for 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, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A Division B Division c $ 1,250,000 $1,129,000 $1,140,000 772,000 829,000 828,000 75,000 63,000 64,000 59,000 52,000 52,000 10,203,000 2,447,000 4,024,000 Wescott is considering an expansion project in the upcoming year that will cost $7 million and return $565,000 per year. The project would be implemented by only one of the three divisions. Required: 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. Reg 1 Req 2 Req3 Req 4A Req 4B Req 5 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, i.e., 0.1234 should be entered as 12.34%.)) Residual Income (Loss) Division A % Division B % Division C % ROI Reg 1 Req 2 Req3 Req 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 (413,240) Division $ 41,240 B Division C $ (73,920) Req 1 Req 2 Req3 Req 4A Reg 4B Reg 5 Reg 6 Rank the divisions according to the ROI and residual income of each. Rank Division | A Division B Division C 2 Reg 1 Req 2 Reg 3 Req 4A Reg 4B Req 5 Reg 6 Compute the return on investment on the proposed expansion project. (Round your percentage answer to 2 decimal places, (i.e. 0.1234 should be entered as 12.34%.)) Return on Investment of Proposed Expansion Project 8.07 % eq 4B Reg 1 Reg 2 Req 3 Req 4A Reg 4B Reg 5 Reg 6 Is this an acceptable project? Is this an acceptable project? Yes Reg 1 Reg 2 Req 3 Req 4A Reg 4B Reg 5 Reg 6 Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. Division A Division B Division C Increase Decrease IncreaseStep by Step Solution
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