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Saloa Awerage operating assets Net operating income Mnimum required ratbe of return $5,200,000 5 1300.000 3223.600 S9,200,000 5 4,600,000 63,600 Division $ 8,300,000 $ 2,075,000
Saloa Awerage operating assets Net operating income Mnimum required ratbe of return $5,200,000 5 1300.000 3223.600 S9,200,000 5 4,600,000 63,600 Division $ 8,300,000 $ 2,075,000 $ 128,650 10.00 % 16.60 % 7.00% 1, Compute the return on investment (RO) for each division using the fomula stated in tems of margin and tumover, (Round your answers to 2 decimal places.) Margin ROI Division A Division B Division C 0.43 : % 4.00 imes mos 2. Computo the reaidual income (losa) for each division. (Loss amounts should be Indicated by a minus sign. Round your "Required rate of return" to 2 decimal places.) Division A Division B Division C Avorngo oporating asoot Required rate of retum Required operating income Actual oporating income Required operatng income (above) Residual income (oss) 3. Assume tat each dhision is presened with an investment opportunity that would yield a 12% rate of return. a. If perfomance is being measured by ROI, which dvision or diisions wll probably accept or reject he opporunny? Division A
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