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Sezer Technologies, Inc. (STI), has three divisions. STI has a desired rate of return of 12.5 percent. The operating assets and income for each division

Sezer Technologies, Inc. (STI), has three divisions. STI has a desired rate of return of 12.5 percent. The operating assets and income for each division are as follows:

Divisions Operating Assets Operating Income
Printer $ 270,000 $ 48,000
Copier 405,000 45,000
Fax 180,000 27,000
Total $ 855,000 $ 120,000

STI headquarters has $60,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs:

Expected ROIs for
Divisions Additional Investments
Printer 14.0 %
Copier 13.0 %
Fax 12.0 %

Required:
a-1.

Calculate the ROI for each division. (Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

a-2. Which division manager is currently producing the highest ROI?
Fax division
Printer division
Copier division

b.

Based on ROI, which division manager would be most eager to accept the $60,000 of investment funds?

Fax division
Copier division
Printer division

c.

Based on ROI, which division manager would be least likely to accept the $60,000 of investment funds?

Printer division
Copier division
Fax division

d. Which division offers the best investment opportunity for STI?
Fax division
Printer division
Copier division

g. Calculate the residual income:
(1)

At the corporate (headquarters) level before the additional investment.

(2)

At the division level before the additional investment. (Loss amounts should be indicated by a minus sign.)

(3)

At the investment level. (Loss amounts should be indicated by a minus sign.)

(4) At the divsion level after the additional investment. (Loss amounts should be indicated by a minus sign.)

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