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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 Division A Division B Division C Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets $ 1,240,000 $ 1,167,000 $ 1,184,000 860,000 66,000 54,000 766,000 77,000 61,000 857,000 65,000 54,000 10,549,000 2,541,000 4,178 Wescott is considering an expansion project in the upcoming year that will cost $6.8 million and return $587,000 per year. The project would be implemented by only one of the three divisions Required 1. Compute the ROl for each division. (Do not round your intermediate calculations. Round your percentage answer to 2 decimal places, (i.e 0.1234 should be entered as 12.34%.)) ROI Division A Division EB Division C 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.) Residual income Loss 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 entered with a minus sign. Enter your Rol percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.)) Residual Income (Loss ROl Division A Division B : Division C
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