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Required: a) Compute the Majestic World division's performance measures for the previous year.: i. return on investment (ROI) (4 marks) i. residual income. (4 marks)

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Required: a) Compute the Majestic World division's performance measures for the previous year.: i. return on investment (ROI) (4 marks) i. residual income. (4 marks) b) Would the Majestic World division's management have been more willing to accept the investment opportunity if residual income rather than ROI had been employed as a performance measure? Explain your response. (9 marks)C) Construct an Excel spreadsheet demonstrating how the answers to requirement 1 will change if : i. profit from operations was RM8 100 000 (4 marks) ii. productive assets at year-end were RM54 000 000. (4 marks)One World is a top luxury home builder. One World extended its operations three years ago by acquiring Majestic World, which provided One World a strong foothold in the project home market. Majestic World is operated as an investment centre, and the return on investment (ROI) is utilised to evaluate Majestic's success (with the average of beginning and end-of- year investment balances being used in the ROI calculation}. Manager bonuses at Majestic World are likewise based in part on ROI. One World and its Majestic Wortd branch are expected to earn a minimum of 15% before taxes on their investments. Since its acquisition, Majestic World's ROI has varied between 19% - 22%. Majestic World regarded an investment opportunity with a projected ROI of 18% last year. The management of Majestic World chose against investing because they feared it would reduce their total ROI. Majestic World's prot statement for the previous year is presented below. At the end of the scal year, the division's productive assets were RM56.7million, a 5% rise over the previous years balance. Majestic World division Prot statement for the year ended 31 December [in RM'DDs} wW |Cost of goods sold ?1 100 |Gross margin W Operating costs: Administrative RM 9 630 Selling 1&- 200 25 830 Prot from operations before income taxes RM11 om

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