UT B CLICK HERE TO SAVE YOUR WORK A Total 15. marts 1 The following information is provided for XYZ Company, for the year ended Dec 31, 2021 2 3 4 XYZ Company Income Statement For the year ended Dec 31, 2021 Assets 6 7 XYZ Company Balance Sheet Jan 1 2021 Dec 31 2021 $145,000 $170,000 360,000 150,000 590,000 545,000 865,000 840,00 420,000 450,000 325,000 325,000 $2,705,000 $2,780,000 B 9 10 11 Cash Accounts receivable Inventory Plant & equipment (net) Investment in ABC Co. Land (undeveloped) Total Assets Liabilities Accounts payable Long term debt Shareholders equity Total Liabilities & Shareholders' Equity $1,100,000 2,542.000 1,558,000 1,125,000 433,000 120,000 125,200 $187 800 Sales revenue Cost of goods sold Gross margin Selling & admin expense Operating income Less interest expense tax expense @ 10% Net income 12 13 $380,000 1,000,000 1,325,000 $310,000 1,000,000 1,440,000 15 16 $2,705,000 $2,780,000 7 Other information: The company requires a minimum required rate of return - 18% Required: Complete the following analysis of XYZ Co. 1 Calculate the following amounts for 2021 > Average operating assets (2 marks) * Cut Font Name PW Remov B & Down from 1 P Overtne Merge hede copy CLICK HERE TO SAVE YOUR WORK A 1HX 19 Other information: The company requires a minimum required rate of return 20 21 22 Required: Complete the following analysis of XYZ.CO. I Calculate the following amounts for 2021 > Average operating assets (2 marks) 20 24 25 26 27 28 6.0 29 0 2 > ROI and the Residual income for the year ended Dec 31, 2021 (6 marks) 3 3.0 3 The business is evaluating a new investment project which will require an increase in average operating assets = $220,000 and is forecasted to generate $44,000 in operating income. Calculate the ROI for this project If the company pays bonus based on ROI, would XYZ managers proceed with the project? (3 marks) proceed with the project lant nnn...hoh nenin Rased on the ROI calculation, the company would * Fonte- Tom sam Copy CLICK TO SAVE YOUR WORK N47 A 3 25 3 The business is evaluating a new investment project which will require an increase in average operating assets $220,000 and is forecasted to generate $44,000 in operating income. Calculate the Rol for this project If the company pays bonus based on ROI, would XYZ managers proceed with the project? (3 martes) 10 40 41 41 15 16 Based on the ROI calculation, the company would (enter X in highlighted cells to make your choice) proceed with the project not proceed with the project > 4.0 . 4 Now calculate the Residual income on the project, assuming the minimum required rate of return 20% Based on this calculation would the company proceed with the project? (4 marks) Based on the Residual Income calculation, the company should (enter X in highlighted cells to make your choice) proceed with the project not proceed with the project
