QUESTION 2 Creative Media has 3 radio broadcast channels, namely Trend FM, Ceria and Retro FM....

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QUESTION 2 Creative Media has 3 radio broadcast channels, namely Trend FM, Ceria and Retro FM. Each broadcast channel is an investment center and part of the company's core operations. A summary of current financial information for radio broadcasting operations is as follows (in RM million): Channel Trend FM Cheerful Retro FM Operating income Results Total assets RM1,100 RM4,600 RM4,900 160 6,400 3,000 200 1,650 2,600 Promotion incentives and bonus giving to managers are based on the achievement of return on investment (ROI) of each channel. Channels that report an increase in ROI will automatically be eligible for a reward. On the other hand, if a decrease in ROI occurs, a full explanation should be provided, and the awarding of bonuses is at the discretion of the superior. Recently, Mr. Iqbal, the manager of Trend FM has received a new proposal to invest RM200 million in providing broadcasting programs that are in line with the current development of radio broadcasting technology. This investment is expected to further increase the number of listeners and Trend FM operating income through advertising revenue and other revenue of RM30 million per year. Be required: a) Calculate the current ROI rate for all three radio channels. b) Based on the ROI method, will Mr. Iqbal continue with the new investment proposal? Support your answer with calculations. c) If the surplus income method is used, what is the decision of Mr. Iqbal? (Assume that the minimum return rate is 12%). QUESTION 2 Creative Media has 3 radio broadcast channels, namely Trend FM, Ceria and Retro FM. Each broadcast channel is an investment center and part of the company's core operations. A summary of current financial information for radio broadcasting operations is as follows (in RM million): Channel Trend FM Cheerful Retro FM Operating income Results Total assets RM1,100 RM4,600 RM4,900 160 6,400 3,000 200 1,650 2,600 Promotion incentives and bonus giving to managers are based on the achievement of return on investment (ROI) of each channel. Channels that report an increase in ROI will automatically be eligible for a reward. On the other hand, if a decrease in ROI occurs, a full explanation should be provided, and the awarding of bonuses is at the discretion of the superior. Recently, Mr. Iqbal, the manager of Trend FM has received a new proposal to invest RM200 million in providing broadcasting programs that are in line with the current development of radio broadcasting technology. This investment is expected to further increase the number of listeners and Trend FM operating income through advertising revenue and other revenue of RM30 million per year. Be required: a) Calculate the current ROI rate for all three radio channels. b) Based on the ROI method, will Mr. Iqbal continue with the new investment proposal? Support your answer with calculations. c) If the surplus income method is used, what is the decision of Mr. Iqbal? (Assume that the minimum return rate is 12%).