SM Prime Holdings is organized into business units based on their products and services and has four operating segments as follows:

• Mall
• Residential
• Commercial
• Hotels and Convention

Management through the executive committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with the operating profit or loss in the consolidated financial statement

Transfer prices between business segments are set on an arm's length basis similar transactions with non related parties. Such transfers are eliminated in the consolidated financial statements

Shown below is the business segment data of SMPH

Based on the above information compute the following:

1. Compute the Return on investment (ROI) of each of the business segments.
2. Compute the Residual Income.
3. Assume that SMPH required a minimum required rate of return of 12%, 20%, 10% and 7% for the mall, residential, commercial and hotel and convention respectively and a business opportunity that would yield a return of 15% is presented to each business unit
   1. If performance is measured by ROI which division or divisions will likely accept the opportunity? reject? why?
   2. If performance is measured by residual income which division will likely accept the opportunity? reject? why?

Consolldated Balances Mall Residential Eliminations 2019 Hotels and Convention Commercial Centers (In Thousands) P4,510,820 P5,046,618 74.100 13,662 P4,584,920 P5,060,280 Revenue: External customers Inter-segment P45,213,765 P63,540,257 85.072 P63,625359 P118311,490 (172.8340) L&172,834) P118311,490 1:45, 213 765 (P1,013,063) Segment results Income before income tax Provision for income tax Net income Net Income attributable to: Equity bolders of the Parent Non-controlling interests P30,418,637 (2.020.933) P23,3974704 P15,020,332 (2.428,262) P12.592.070 P3,661,683 (658.358) 13,003 325 P1,074,405 (265.768) P808,637 P49,161,994 (10.373,221) P38,788,673 (21.013.063) P2.003.325 P808,637 P22,701.115 696,589 (21,013,063) P12,585,587 6,483 P38,085,601 703,072 Segment assets P388,653.151 P217.788,016 P51,340.770 P13,573,854 (P4,076,117) P667 279,674 Segment liabilities P237,486.362 P124,277,871 25,982.687 P1,092,597 (P4,076,1177 P364.763,400 Other information: Capital expenditures Depreciation and anortization P29.283.828 9.514.073 +27,578,564 143,438 P10.216.823 560.854 P1,618,631 606,713 P68,697,146 10.825,078 Consolldated Balances Mall Residential Eliminations 2019 Hotels and Convention Commercial Centers (In Thousands) P4,510,820 P5,046,618 74.100 13,662 P4,584,920 P5,060,280 Revenue: External customers Inter-segment P45,213,765 P63,540,257 85.072 P63,625359 P118311,490 (172.8340) L&172,834) P118311,490 1:45, 213 765 (P1,013,063) Segment results Income before income tax Provision for income tax Net income Net Income attributable to: Equity bolders of the Parent Non-controlling interests P30,418,637 (2.020.933) P23,3974704 P15,020,332 (2.428,262) P12.592.070 P3,661,683 (658.358) 13,003 325 P1,074,405 (265.768) P808,637 P49,161,994 (10.373,221) P38,788,673 (21.013.063) P2.003.325 P808,637 P22,701.115 696,589 (21,013,063) P12,585,587 6,483 P38,085,601 703,072 Segment assets P388,653.151 P217.788,016 P51,340.770 P13,573,854 (P4,076,117) P667 279,674 Segment liabilities P237,486.362 P124,277,871 25,982.687 P1,092,597 (P4,076,1177 P364.763,400 Other information: Capital expenditures Depreciation and anortization P29.283.828 9.514.073 +27,578,564 143,438 P10.216.823 560.854 P1,618,631 606,713 P68,697,146 10.825,078