Question
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:
| Net Income | Assets | ||
|---|---|---|---|
| Las Vegas | $960,000 | $4,000,000 | |
| Dallas | 1,200,000 | 8,000,000 | |
| Tampa | 2,040,000 | 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 | Rank | |
|---|---|---|
| Las Vegas | Answer Mark 0.00 out of 1.00 % | Answer123 |
| Dallas | Answer% | Answer123 |
| Tampa | Answer% | Answer123 |
b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income.
| ROI | Rank | |
|---|---|---|
| Las Vegas | $Answer | Answer123 |
| Dallas | Answer | Answer123 |
| Tampa | Answer | Answer123 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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
Auditing The Auditors Waste And Abuse At Irs And Customs Hearing Before The Committee On Governmental Affairs United States Senate One Hundred Session August 4 1993
Authors: U. S. Committee On Governmental Affairs
1st Edition
1334865558, 978-1334865558
