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Problem 5 Selected data for three divisions of Structural Engineering Solutions are given below: Division A Division B Division I: Sales $12,000,000 $14,000,000 $25,000,000 Average

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Problem 5 Selected data for three divisions of Structural Engineering Solutions are given below: Division A Division B Division I: Sales $12,000,000 $14,000,000 $25,000,000 Average operating assets 53.000000 $7,000,000 55,000,000 Net operating income $600,000 $560,000 $360,000 Minimum reguirecl rate of return 14% 10% 15% Required: a} COmpute the return on investment {ROI} for each division using the formula stated in terms of margin and turnover. b] Compute the residual incOme for each division. c] Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reiect? Why? d) Assume that each division is presented with an investment opportunity that would yield a 12% rate of return. If performance is being measured by RI, which division or divisions will probably accept the opportunity? Reject? Why

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