Problem 25.1A (Algo) Empire Hotel (LO25-2, LO25-3, LO25-4). The Empire Hotel is a full-service hotel in a large city. Empire is organized into three departments that are treated as investment centers. Budget information for the coming year for these three departments is shown as follows. The managers of each of the departments are evaluated and bonuses are awarded each year based on ROI. Average investment Sales revenue Operating expenses Operating earnings Req A Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Empire Hotel Hotel Rooms $7,844,000 $10,000,000 8,411,000 $1,589,000 Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment. b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Req B11 Departments Complete this question by entering your answers in the tabs below. Req B2 ROI Restaurants $4,786,000 $2,000,000 1,315,000 $685,000 Return on Sales Health Spa $1,232,000 $ 600,000 480,000 $ 120,000. Req C1 Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. (Round your percentage answers to 2 decimal places (1.e., 0.1234 should be considered as 12.34.)) Capital Turnover Req C2 Average investment Sales revenue Operating expenses Operating earnings Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Reg A Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Departments $ 7,844,000 $10,000,000 8,411,000 $1,589,000 Req B1 Hotel Roog Restaurant Health Spa ROI Reg B2 Reg Cl Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. (Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34.)) % Return on Sales $4,786,000 $2,000,000 1,315,000 $685,000 % % Capital Turnover $1,232,000 $ 600,000 480,000 $120,000 w % Reg C2 Reg 1 > 1 Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? e-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req A Req 82 Req C2 What would be the ROI of investment in the new exercise equipment and Health Spa? (Round your percentage answers to 2 decimal places (.e., 0.1234 should be considered as 12.34.)) Health Spa ROI Req B1 Exercise Equipment Reg C1 C Reg A Reg 82 > nts 010037 Book Print rences Operating earnings Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover Reg A Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8.000 per year as a result of the new equipment b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req B1 8,411,000 $1,589,000 Req 82 Would the manager motivat 1,315,000 $685,000 Yes No Reg CI 000,00 480,000 120,000 Would the manager of the Health Spa be motivated to undertake such an investment? G 01 Reg C2 ReqC1 > 00:24 s Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating earnings would increase by $8,000 per year as a result of the new equipment. b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Complete this question by entering your answers in the tabs below. Req A Req B1 Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. (Loss amounts should be indicated with a minus sign.) Departments Hotel Rooms Restaurants Health Spa vagyo Residual Income (loss) Req 82 $ 120,000 Reg C1 11 Dites revenue Operating expenses Operating earnings $10,000,000 8,411,000 Required: a. Compute the ROI for each department. Use the DuPont method to analyze the return on sales and capital turnover. Reg A $2,000,000 1,315,000 Assume the Health Spa is considering installing new exercise equipment. Upon investigating, the manager of the division finds that the equipment would cost $40,000 and that operating eamings would increase by $8,000 per year as a result of the new equipment. b-1. What would be the ROI of investment in the new exercise equipment and Health Spa? b-2. Would the manager of the Health Spa be motivated to undertake such an investment? c-1. Compute the residual income for each department if the minimum required return for the Empire Hotel is 17 percent. c-2. What would be the impact of the investment on the Health Spa's residual income? Req B2 Complete this question by entering your answers in the tabs below. $600,000 400,000 $ 120,000 Reg C1 Req 01 Reg C2 What would be the impact of the investment on the Health Spa's residual income? impact of the investment Decrease in residual income Decrease in residual loss Increase in residual income Increase in residual loss