Seminole Industries would like to become more vertically integrated. They are considering the purchase of one or more of the companies in their supply chain. Which one(s) of the following companies would you recommend as the best choice? Use ROI and residual income calculations to make your decision. Show all work.

____________ Company___________________

_____A_____ _____B_____ ____ C_____

Sales $3,600,000 $5,000,000 $1,500,000

Net Operating Income 240,000 220,000 96,000

Average Operating Assets 1,200,000 2,000,000 800,000

Minimum required rate of return: 10% 8% 14%