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The division manager of HFD Inc., was debating the merits of a new producta toy drone with a flying radius of 25 feet. The budgeted
The division manager of HFD Inc., was debating the merits of a new producta toy drone with a flying radius of 25 feet.
The budgeted income of the division was $875,000 with operating assets of $5,125,000. The proposed investment would add income of $640,000 and would require an additional investment in equipment of $4,000,000. The minimum required return on investment for the company is 13%.
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1. Compute the ROI of the following (round to the nearest whole percent):
Line Item Description | Answer |
---|---|
a. The division if the drone project is not undertaken. | fill in the blank 1 % |
b. The drone project alone. | fill in the blank 2 % |
c. The division if the drone project is undertaken. | fill in the blank 3 % |
2. Compute the residual income of the following:
Line Item Description | Amount |
---|---|
a. The division if the drone project is not undertaken. | $fill in the blank 4 |
b. The drone project alone. | $fill in the blank 5 |
c. The division if the drone project is undertaken. | $fill in the blank 6 |
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