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The Western Division of Claremont Company had net operating income of $149,000 and average invested assets of $558,000. Claremont has a required rate of return
The Western Division of Claremont Company had net operating income of $149,000 and average invested assets of $558,000. Claremont has a required rate of return of 13.50 percent. Western has an opportunity to increase operating income by $52,000 with a $93,000 investment in assets.
Compute Western Divisions return on investment and residual income currently and if it undertakes the project.
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