Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Division A Division B Division C Sales revenue $ 1,240,000 $ 1,167,000 $ 1,184,000 Cost of goods sold 766,000 857,000 860,000 Miscellaneous operating expenses 77,000 65,000 66,000 Interest and taxes 61,000 54,000 54,000 Average invested assets 10,549,000 2,541,000 4,178,000 Wescott is considering an expansion project in the upcoming year that will cost $4.7 million and return $587,000 per year. The project would be implemented by only one of the three divisions.

1.	Compute the ROI for each division. (Do not round your intermediate calculations. Round your percentages to 2 decimal places.)
	ROI Percentage
	Division A

Division B Division C

2.	Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.)
	Residual Income
	Division A

Division B

Division C

3.	Rank the divisions according to the ROI and residual income of each. Rank
	Division A
	Division B

Division C

4-a.	Compute the return on the proposed expansion project. (Round your percentages to 2 decimal places.)
	Return on proposed Expansion Project percent

4-b.

Is this an acceptable project?

	Yes
	No

5.	Without any additional calculations, state whether the proposed project would increase or decrease each divisions ROI and state whether the division manager would accept or reject the proposed project.
	Division A Division B

Division C

6.

Compute the new ROI and residual income for each division if the project was implemented within that division. (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations. Round your percentages to 2 decimal places.) ROI Percentage Residual Income Division A Division B Division C