Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division Division 3 Division Sales $15,250,000 $ 35,250,000 $ 25,250,000 Average operating assets $ 3,050,000 S 7.050,000 $ 5,050,000 Net operating income 5 655,750 5 528,250 5 732,250 Minimum required rate of return 9.000 9.500 14.50 Required: 1. Compute the return on investment (Ron for each division using the formula stated in terms of margin and turnover, 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 38 Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover ROI Division A Division B Division % % % % % Req2 > Sales Average operating assets Wet operating income minimum required rate of return $15,250,000 $ 3,050,000 $ 655,750 9.000 5 35,250,000 $7,050,000 $ 528,750 9.505 $25,250,000 $ 5,050,000 $ 732,250 14.500 Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Rea 1 Reg 2 Reg 3 Reg 38 Compute the residual income (loss) for each division. (Do not round intermediate calculations. Loss amounts should be Indicated by a minus sign.) Division A Division B Division Residual income (los) Reg1 Req3A > Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Reg 30 Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division Division Division ( Req2 Req30 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division Req 3A Regan
