The following is selected financial information for the Heron Company:

Sales - $10,000,000

Net Investment - $5,000,000

Operating Income - $1,000,000

Heron Company is a wholly-owned subsidiary of Harrison Corporation. They expect to earn a 15% return on their investment. Based on that information, complete the following problems:

Compute the sales turnover.

Compute the profit margin.

Compute the ROI.

Calculate the residual income.

2. The Sanders Electric Company is evaluating two projects for possible inclusion in the firms budget. Project M will require a $37,000 investment, while Project Os investment will be $46,000. After-tax cash inflows are estimated as follows for the two projects:

Year	Project M	Project O
1	$12,000	$10,000
2	12,000	10,000
3	12,000	15,000
4	12,000	15,000
5	15,000

Determine the payback period for each project.

Calculate the NPV and PI for each project based on a 10% cost of capital. Which, if either, of the projects is acceptable?

Determine the IRR and MIRR for Projects M and O

3. The Brassy Fin Pet Shop is considering an expansion. Construction will cost $90,000 and will be depreciated to zero, using straight-line depreciation over five years. Earnings before depreciation are expected to be $20,000 in each of the next five years.

What are the projects cash flows?

Should the project be undertaken if the firms costs of capital is 12%?