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: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invented assets Division A Division B Division C $ 1,290,000 $1,053,000 $1,052,000 -797,000 773,000 764,000 71,000 59,000 60,000 55,000 48,000 48,000 9,511,000 2,259,000 3,716,000 Wescott is considering an expansion project in the upcoming year that will cost $57 million and return $521,000 per year. The project would be implemented by only one of the three divisions. Required: 1. Compute the ROI for each division 2. Compute the residual income for each division 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. 6. Compute the new ROI and residual income for each division if the project was implemented within that division Required: 1. Compute the ROI for each division 2. Compute the residual income for each division. 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. 6. Compute the new ROI and residual income for each division if the project was implemented within that division. Complete this question by entering your answers in the tabs below. Reg 1 Req2 Reg 3 Req 4A Reg 4B Req 5 Reg 6 Compute the ROI for each division. (Do not round your intermediate calculations. Round your percentage answer to 2 decimal places, (e. 0.1234 should be entered as 12.349.)) Division A Division B Division C ROI 5 * % Req2 > within that division. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Reg 3 Req 4A Req 48 Reg 5 Reg 6 Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.) Residual income (Loun) Division A Division B Division C Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4A Reg 4B Reg 5 Reg 6 Rank the divisions according to the ROI and residual income of each Rank Division A Division B Division C 1 2 Complete this question by entering your answers in the tabs below. Reg 1 Reg2 Req3 Reg 4 Reg 43 Reg 5 Reg 6 Compute the return on investment on the proposed expansion project. (Round your percentage answer to 2 decimal places, (ie 0.1214 should be entered as 12.34%) Rount of Propadao Pro Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Rega Reg 4 Reg 48 Reg 5 Reg 6 Is this an acceptable project? Is this an acceptable project? 4A Reg 5 ) No Yes Complete this question by entering your answers in the tabs below. Reg 2 Regs Reg 1 Reg 3 Reg 4 Reg 4B Reg 6 without any additional calculations, state whether the proposed project would increase or decrease each division's ROI Division Division Division Decrease Increase Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4A Reg 4B Reg 5 Reg 6 Compute the new ROI and residual income for each division if the project was implemented within that division. (Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to 2 decimal places, (1.e., 0.1234 should be entered as 12.34%.)) ROI Residual Income (Loss) Division A Division B Division % % %
