Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
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
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 $ 39,640,000 25,200,000 Incone 2,988,000 2,142,000 Average Assets $ 16,600,000 12,600,000 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 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% Complete this question by entering your answers in the tabs below. Required 1 Required Required 3 Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? Investment Center Income Less target income Residual income Electronics Sporting Goods 2.988,000 $ 2.142.000 Which center generated the most residual income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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%. Should the new investment opportunity be accepted
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started