Compute the return on investmentroi for each division

Reference no: EM13481678

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

2. compute the residual income for each division

3. Assume that each division is presented with an investmentopportunity that would yield a 15% rate of return.

a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? Why?

b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject? Why?

                                                                                          Division B         Division C
Sales.............................................................................   $14,000,000    $25,000,000
Average Operatingassets.............................................. $7,000,000     $5,000,000
Net operatingincome....................................................    $560,000         $8000,000
Minimum required rate ofreturn.....................................      10%                  16%

Reference no: EM13481678

Questions Cloud

Alyssas custom cakes currently sells 5 birthday 2 wedding : alyssas custom cakes currently sells 5 birthday 2 wedding and 3 specialty cakes each month for 50 150 and 100 each

Sam has promised to make four payments to joe each : sam has promised to make four payments to joe. each paymentis in the amount of 1000. what is the present value of these

Search the internet eg a companys website or secgov and : search the internet e.g. a companys website or sec.gov and find an audit report for a companys

Your friend tom is the beneficiary of a life insurance : your friend tom is the beneficiary of a life insurance policy where he can choose one of three options1. 120000 in cash

Compute the return on investmentroi for each division : 1. compute the return on investmentroi for each division usingthe formula stated in terms of margin and turnover.2.

Discuss relative costs amp benefits for firms to : discuss relative costs amp benefits for firms to mandatorily disclose information about their operating segments

On st patrickrsquos day in 1992 chambers development : on st. patrickrsquos day in 1992 chambers development company one of the largest landfill and waste management firms in

At one time circle k was the second-largest convenience : at one time circle k was the second-largest convenience store chain in the united states. at its peak circle k operated

Prepare the journal entries for the preceeding transactions : wright machinery corporation manufactures automible engines for major automobile producers. these engiines have a

User Account

All Pages