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 Division B Division C $ 1,240,000 $1,167,000 $1,184,800 766,000 857,000 860,000 77,000 65,000 66,080 61,000 54,000 54,000 10,549,000 2,541,000 4,178,000 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 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. 4-3. 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 ROL 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. Req1 Reg 2 Req3 Reg 4 Req 48 Reg 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 12.34%.)) ROI Division A Division B Division C Reg 1 Req Reg 3 Req 4A Reg 5 Reg 6 Req 4B 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 Complete this question by entering your answers in the tabs below. Reg 5 Reg 4B Reg 1 Req 2 Req 3 hy Req 4A Rank the divisions according to the ROI and residual income of each. Rank Division A Division B Division C Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req3 Req 4A Req 4B Reg 5 Req 6 Compute the return on investment on the proposed expansion project. (Round your percentage answer to 2 decimal places, (i.e. 0.1234 should be entered as 12.34%.)) Return on Investment of Proposed Expansion Project Is this an acceptable project? Is this an acceptable project? Complete this question by entering your answers in the tabs below. Reg 6 Reg 1 Reg 2 Reg 3 Req 4A Req 4B Reg 5 Real 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, (i.e., 0.1234 should be entered as 12.34%.)) ROI Residual Income (Loss) Division A % Division B % Division C
