Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

	Division A			Division B			Division C
Sales	$	7,400,000		$	11,400,000		$	10,500,000
Average operating assets	$	1,480,000		$	2,850,000		$	2,100,000
Net operating income	$	481,000		$	1,197,000		$	393,750
Minimum required rate of return		28.00	%		42.00	%		25.00	%

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

	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 30% 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?