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Sus Sales revenue perates a popular summer camp for elementary school children. Projections for the current year are as follows: $7,620,000 Operating income $670,250 Average
Sus Sales revenue perates a popular summer camp for elementary school children. Projections for the current year are as follows: $7,620,000 Operating income $670,250 Average assets $3,824,000 The camp's weighted-average cost of capital is 11%, and Susan requires that all new investments generate a return on investment of at least 15%. The camp's current tax rate is 30%. At last week's advisory board meeting. Susan told the board that she had up to $70,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the board's president presented Susan with the following list of three potential investments to improve the camp facilities. Playground Swimming Pool Gym Incremental operating income $1,690 $6,930 $ 3,910 Average total assets 13,000 38,500 23,000 (a) Calculate the return on investment, residual income, and economic value added for each of the three projects. (Enter negative amounts using either a negative sign preceding the number, eg. -45 or parentheses, eg. (45). Round Return on Investment answer to 2 decimal places, e.g. 15.25 & all other answers to O decimal places, e.g. 15 or 15%.) Return on Investment Residual Income $ Economic Value $ Added Playground Pool % Gym %
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