The following information applies to the questions displayed below.]

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Division A

Division B

Division C

Sales

$5,400,000

$10,300,000

$7,900,000

Average operating assets

$1,520,000

$5,600,000

$2,900,000

Net operating income

$297,000

$908,000

$464,000

Minimum required rate of return

14%

17%

16%

Requirement 1:

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places, e.g., .1234 as 12.34. Omit the "%" sign in your response.)

#1.)

ROI

Division A

%

Division B

%

Division C

%

#2) Requirement 2:

Compute the residual income for each division. (Leave no cells blank, be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)

	Division A	Division B	Division C
Residual income	$	$	$

#3)

Requirement 3:

Assume that each division is presented with an investment opportunity that would yield a 19% rate of return.

a)

If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject?

Division A

Division B

Division C

(b)	If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject?
Division A
Division B
Division C