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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
Required Information The following information applies to the questions displayed below] Megamart provides the following information on its two investment centers. Investment Center Sales Electronics Sporting goods $ 35,000,000 17,280,000 Income $ 2,975,000 2,160,000 Average Assets $17,500,000 13,500,000 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 10% 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 14% return on investment. Should the new investment opportunity be accepted? The target return is 10%.
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