Selected sales and operating data for three divisions of different structural engineering firms are given as follows: | | Division A | Division B | Division C | Sales | $ | 5,400,000 | | $ | 9,400,000 | | $ | 8,500,000 | | Average operating assets | $ | 1,080,000 | | $ | 4,700,000 | | $ | 1,700,000 | | Net operating income | $ | 243,000 | | $ | 799,000 | | $ | 148,750 | | Minimum required rate of return | | 14.00 | % | | 17.00 | % | | 11.00 | % | | Required: | 1. | Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round your Turnover answers to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) | | | Margin | Turnover | ROI | Division A | | % | | | % | Division B | | % | | | % | Division C | | % | | | % | | | | 2. | Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Round your Required Rate of Return percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) | | Division A | Division B | Division C | Average operating assets | | | | required rate of return | | | | required operating income | | | | Actual operating income | | | | Required operating income above | | | | Residual income (loss) | | | | | | | 3. | Assume that each division is presented with an investment opportunity that would yield a 16% rate of return. | a. | If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? | | | | | | Division A | | Division B | | Division C | | | b. | If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? | | | | Division A | | Division B | | Division C | | | |