Question
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? | ||||||
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b. | Based on ROI, which division manager would be most eager to accept the $60,000 of investment funds? | ||||||
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c. | Based on ROI, which division manager would be least likely to accept the $60,000 of investment funds? | ||||||
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d. | Which division offers the best investment opportunity for STI? | ||||||
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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.) |
I NEED THIS ANSWERED CORRECTLY!!
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