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Question 8 Presented below is selected information for three regional divisions of Waterway Company. Divisions North West South $299,200 $139,500 $499,600 $360,000 Contribution margin Controllable
Question 8 Presented below is selected information for three regional divisions of Waterway Company. Divisions North West South $299,200 $139,500 $499,600 $360,000 Contribution margin Controllable margin Average operating assets Minimum rate of return $400,900 $211,500 $1,410,000 $930,000 $2,000,000 14% 12 % 9% Compute the return on investment for each division. North Division West Division South Division Compute the residual income for each division. North Divisions West Division South Division Assume that each division has an investment opportunity that would provide a rate of return of 16%. IF ROI is used to measure performance, which division or divisions will probably make the additional investment? North If residual income is used to measure performance, which division or divisions will probably make the additional investment
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