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Sarah Allen operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue Operating income Average assets

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Sarah Allen operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue Operating income Average assets $8,520,000 $756,500 $4,304,000 The camp's weighted average cost of capital is 11%, and Sarah requires that all new investments generate a return on investment of at least 15%. The camp's current tax rate is 30%. At last week's advisory board meeting, Sarah told the board that she had up to $70,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the board's president presented Sarah with the following list of three potential investments to improve the camp facilities Swimming Pool Incremental operating income Average total assets Playground $ 2.080 16.000 $ 6,660 37,000 Gym $ 4,080 24.000 (a) Calculate the return on investment, residual income, and economic value added for each of the three projects. (Enter negative amounts using either a negative sign preceding the number, e.g. -45 or parentheses, eg. (45). Round Return on investment answer to 2 decimal places, eg. 15.25 & all other answers to O decimal places, eg, 15 or 15%) Playground Pool Gym %6 % Return on Investment Residual Income Economic Value Added $ $ $

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