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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
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 invested assets Division A 1.265,000 S 782,000 66,000 50,000 8,646,000 Division B 958.000 703,000 54,000 43,000 2.024.000 Division C 942,000 684 000 55.000 43,000 3,331,000 Wescott is considering an expansion project in the upcoming year that will cost $5.2 million and return $466 000 per year. The project would be implemented by only one of the three divisions 6. Compute the new ROI and residual income for each division if the project was implemented within that division. (Loss percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.)) ROI Residual Income Loss) Division A Division B Division C 6.38 9.23% 7.84
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