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1. Compute the ROI of the following (round to the nearest whole percent): a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. 2. Compute the residual income of the following: a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. % % % 300

1. Compute the ROI of the following (round to the nearest whole percent): a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. 2. Compute the residual income of the following: a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. % % % 300

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Return on Investment and Investment Decisions The division manager of HFD Inc., was debating the merits of a new product-a toy drone with a flying radius of 25 feet. The budgeted income of the division was $725,000 with operating assets of $3,625,000. The proposed investment would add income of $640,000 and would require an additional investment in equipment of $4,000,000. The minimum required return on investment for the company is 12%. 1. Compute the ROI of the following (round to the nearest whole percent): a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. 2. Compute the residual income of the following: a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. % % %
Transcribed Image Text:Return on Investment and Investment Decisions The division manager of HFD Inc., was debating the merits of a new product-a toy drone with a flying radius of 25 feet. The budgeted income of the division was $725,000 with operating assets of $3,625,000. The proposed investment would add income of $640,000 and would require an additional investment in equipment of $4,000,000. The minimum required return on investment for the company is 12%. 1. Compute the ROI of the following (round to the nearest whole percent): a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. 2. Compute the residual income of the following: a. The division if the drone project is not undertaken. b. The drone project alone. c. The division if the drone project is undertaken. % % %
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