Question
Selling price of new device $ 23.50/unit Estimated sales 245,000 units Investment in additional equipment $5,200,000 Cost of production $12.32/unit The company's minimum required rate
| Selling price of new device | $ 23.50/unit |
|---|---|
| Estimated sales | 245,000 units |
| Investment in additional equipment | $5,200,000 |
| Cost of production | $12.32/unit |
| The company's minimum required rate of return | 22% |
Required:
Prepare a net operating schedule for the company.
Calculate the return on investment and the residual income.
Is this a good investment for the company? Why or why not?
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
8th edition
978-1259569197
