Problem 2: Investment Centers SHOW ALL CALCULATIONS!! Goodwin Company has three segments: 1, 2, and 3. Data regarding these segments follow: Segment 1 Segment 2 Segment 3 Contribution to indirect expenses $397,100 $263,600 $146,400 (this is segment income) Assets directly used by the segment $2,719,000 $1,407,000 $1,171,000 (this is the investment) Required: a. Calculate the return on investment for each segment. Rank them from highest (1) to lowest (3) using return on investment as the measure. b. Calculate the residual income for each segment using a cost of capital of 9% for each segment. Rank the segments from highest (1) to lowest (3) using residual income as the measure. c. Repeat part B but this time desired cost of capital is 13%. Rank the segments from highest (1) to lowest (3) using the new residual income as the measure. Round your Return on Investment percent to one decimal place and your Residual income to the nearest dollar (no decimals) YES 67 a. Return on Investment: 68 Hinta Seg 1 Segment Income = Contribution to Indirect costs Seg 2 Seg 3 69 EBERRY Hint? Seg 1 Minimum Income is (Investment x Cost of Capital %) Seg 2 eg 3 70 71 = ROI 72 Rankings (1 best to 3 worst) 73 Self check for Seg 1 and Seg 2: 74 b. Residual Income YES 75 76 77 78 79 = Residual Income 80 Rankings (1 best to 3 worst) 81 Self check for Seg 2 and 3: 82 c. Residual Income (revised) YES 83 Hint? Residual income Segment Income - Minimum Income Seg 2 Seg 3 Seg 1 84 85 86 87 = Residual Income YES 82 c. Residual Income (revised) 83 Hint? Seg 1 Residual Income = Segment Income Minimum Income Seg 2 Seg 3 84 85 86 87 = Residual Income 88 Rankings (1 best to 3 worst) 89 Self check for Seg 1 and 3: 90 Comment on the rankings: + 91