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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 S 1,250,000 1,129,000 1,140,000 828,000 64,000 52,000 Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets 772,000 75,000 59,000 829,000 63,000 52,000 Wescott is considering an expansion project in the upcoming year that will cost $7 million and return $565,000 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 2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign.) Residual i Loss Division B
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