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Compute the return on investment for each division

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Reference no: EM131779582

Problem - Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Division A

Division B

Division C

Sales

$5,400,000

$10,800,000

$8,100,000

Average operating assets

$1,410,000

$5,500,000

$2,000,000

Net operating income

$295,000

$899,000

$320,000

Minimum required rate of return

14%

17%

16%

Required -

1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.

2. Compute the residual income for each division.

Reference no: EM131779582

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