Q9

The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. FORKLIFT MATERIAL HANDLING Income statement Comparison Current Year Prior Year (Amounts in thousands) Expenses: \begin{tabular}{lrr} Wages & $8,750 & $6,189 \\ Utilities & 700 & 200 \\ Repairs & 168 & 325 \\ Selling & 507 & 200 \\ \( { \)\cline { 2 - 2 }\( } } \) & $10,125 & $6,914 \end{tabular} Operating income ? Operating income \%? ? Total assets (investment base) $4,600$1,600 Return on investment ? Residual income ( 8% cost of capital) ? c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. The residual income related to the investment in the current year. This with the ROI results. Management consider both methods in their analysis of the investment