Question
The Western Division of Claremont Company had net operating income of $153,000 and average invested assets of $555,000. Claremont has a required rate of return
The Western Division of Claremont Company had net operating income of $153,000 and average invested assets of $555,000. Claremont has a required rate of return of 12.75 percent. Western has an opportunity to increase operating income by $35,000 with a $87,000 investment in assets.
Compute Western Divisions return on investment and residual income currently and if it undertakes the project.
Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answers to the nearest whole dollar.
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