Requirements 1. What is the original return on investment (ROI) for Preston Ceramics (before making any additional investment)? 2. What would the ROl be for Preston Ceramics if this investment opportunity were undertaken? Would the manager of the Preston Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? standpoint of Sweeney Corporation? Why or why not? to be undertaken? Would the manager of the Preston Ceramics division want to make this 3. What is the ROl of the investment opportunity? Would the investment be desirable from the 4. What would the residual income (RI) be for Preston Ceramics if this investment opportunity were investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sweeney Corporation? Why or why not? 6. Which performance measurement method, ROl or RI, promotes goal congruence? Why? Preston Ceramics, a division of Sweeney Corporation, has an operating income of $63,000 and total assets of $420,000. The required rate of return for the company is 12%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Preston Ceramics has the opportunity to undertake a new project that will require an investment of $140,000. This investment would earn $18,200 for the company Read the requirements Requirement 1. What is the original return on investment (ROl) for Preston Ceramics (before making any additional investment)? First determine the formula to calculate the ROI Operating income Total assets ROI (Enter the percentage to two decimal places.) The original return on investment (ROI) for Preston Ceramics is 15% Requirement 2. What would the ROl be for Preston Ceramics if this investment opportunity were undertaken? Would the manager of the Preston Ceramics division want to make this investment if she were evaluated based on ROl? Why or why not? (Enter the percentage to two decimal places.) If this investment opportunity were undertaken, the ROl would be Enter any number in the edit fields and then click Check Answer 10% parts remaining Clear All Check