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Selected sales and operating data for three divisions of different structural engineering firms are given as follows Division A Division C Sales Average operating assets
Selected sales and operating data for three divisions of different structural engineering firms are given as follows Division A Division C Sales Average operating assets Net operating income Minimum required rate of return Division B $5,000,000 9,000,000 $8,100,000 $1,000,000 4,500,000 $1,620,000 $ 205,000 S 729,000 109,350 16.00% 16.20% 13.00% Required 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and tumover. (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 ROl 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 18% 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
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