Question
The Western Division of Claremont Company had net operating income of $151,000 and average invested assets of $568,000. Claremont has a required rate of return
The Western Division of Claremont Company had net operating income of $151,000 and average invested assets of $568,000. Claremont has a required rate of return of 12.50 percent. Western has an opportunity to increase operating income by $41,000 with a $100,000 increase in average invested assets. Compute Western Divisions return on investment and residual income currently and if it undertakes the project. (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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