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How do compute the return on investment for each division

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Reference no: EM132642347

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

                                                                      Division A                 Division B                  Division C

Sales ........................................................... $12,000,000             $14,000,000           $25,000,000

Average operating assets ............................ $3,000,000                    $7,000,000             $5,000,000

Net operating income .................................. $600,000                       $560,000                $800,000

Minimum required rate of return .................. 14%                                  10%                              16%

Required:

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

Problem 2. Compute the residual income for each division.

Reference no: EM132642347

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