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! Required Information [The following Information applies to the questions displayed below] Megamart provides the following Information on its two Investment centers. Investment Center sales

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! Required Information [The following Information applies to the questions displayed below] Megamart provides the following Information on its two Investment centers. Investment Center sales Income Average Assets Electronics $ 42, 240,000 $ 3, 168,060 $ 17, 600, 080 sporting goods 23, 120, 080 2, 312, 090 13, 600, 080 1. Compute return on Investment for each center. Using return on Investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 11% of average assets. Compute residual Income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 15% return on Investment. Should the new investment opportunity be accepted? The target return Is 11%.Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Return on Investment Numerator: Denominator: = Return on Investment Electronics = Sporting Goods Which center is most efficient at using assets to generate income? Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? Investment Center Electronics Sporting Goods Income Less target income Residual income Which center generated the most residual income? Assume the Electronics center is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted? The target return is 11%. Should the new investment opportunity be accepted? ....... No YesInvestment Profit Margin Turnover Compute profit margin for each center. Which center generates the most net income per dollar of sales? Profit Margin Numerator: Denominator: Investment Center Profit Margin Electronics Sporting Goods Which department generates the most net income per dollar of sales? Profit Margin Investment Turnover Compute investment turnover for each center. Which department is most efficient at generating sales from average invested assets? Investment Turnover Numerator: 1 Denominator: Investment Center = Investment Turnover Electronics Sporting Goods Which department is most efficient at generating sales from average invested assets?

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