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

	Division A			Division B			Division C
Sales	$	5,800,000		$	9,800,000		$	8,900,000
Average operating assets	$	1,450,000		$	4,900,000		$	2,225,000
Net operating income	$	284,200		$	872,200		$	191,350
Minimum required rate of return		18.00	%		17.80	%		15.00	%

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 20% 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