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Return on Investment and Residual Income Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the
Return on Investment and Residual Income Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Las Vegas Dallas Net Income Assets $960,000 $4,000,000 1,200,000 9,600,000 Tampa 2,280,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Las Vegas Dallas % Tampa % % Rank b. Calculate residual income for each profit center based on a desired ROI of 12% and rank them from highest to lowest based on residual income. Las Vegas $ ROI Rank Dallas Tampa
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