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The following data pertain to three divisions of Calrisian Enterprises. The companys required rate of return on invested capital is 8 percent. Division I Division
The following data pertain to three divisions of Calrisian Enterprises. The companys required rate of return on invested capital is 8 percent. |
Division I | Division II | Division III | |||||||
Sales revenue | $ | 12,000,000 | ? | ? | |||||
Income | $ | 2,150,000 | $ | 530,000 | ? | ||||
Average investment | $ | 2,620,000 | ? | ? | |||||
Sales margin | ? | 40 | % | 45 | % | ||||
Capital turnover | ? | 2 | ? | ||||||
ROI | ? | ? | 30 | % | |||||
Residual income | ? | ? | $ | 129,000 | |||||
Required: | |
2. | Suppose Division IIs sales margin increased to 45 percent, while its capital turnover remained constant. Compute the divisions new ROI. |
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