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Warren Company has two divisions with the following results: Ashland ErieSales revenue$453,000 $1,230,000Divisional expenses$273,000 $853,000Segment income$180,000 $353,000Average invested assets$1,230,000 $4,030,000 Warren Company has a hurdle
Warren Company has two divisions with the following results:
Ashland ErieSales revenue$453,000 $1,230,000Divisional expenses$273,000 $853,000Segment income$180,000 $353,000Average invested assets$1,230,000 $4,030,000
Warren Company has a hurdle rate of 12.3%.
a. Calculate the return on investment for each division. (Round your answers to 2 decimal places.)
b. Break each divisions return on investment down into its component parts using the DuPont method. (Round your profit margin to 2 decimal places and investment turnover to 3 decimal places.)
c. Calculate the residual income for each division. (Negative amounts should be indicated by a minus sign.)
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