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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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