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The Empire Hotel is a full-service hotel in o large city. Empire is organized into three departments that are treated as investment centers. Budget information
The Empire Hotel is a full-service hotel in o large city. Empire is organized into three departments that are treated as investment centers. Budget information for the coming year for these three departments is shown as follows. The managers of each of the departments are evaluoted and bonuses ore owarded each year based on ROI. Required: a. Compute the ROl for each department Use the DuPont method to analyze the return on sales and capital turnover. Assume the Health Spo is considering installing new exercise equipment Upon investigoung, the manager of the division finds that the equipment would cost $40,000 and that operating earrings would increose by $8,000 per year as a result of the new equipment b-1. What would be the ROl of investuent in the new exercise equipment and Health Spe? b.2. Would the manager of the Heath Spo be motivated to undertake such an investment? c-1. Compute the residual income for each deparment if the ninimum required return for the Empire Hotel is 17 percent: c.2. What would be the impact of the investment on the Health Spa's residual income
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