A division with capital employed of sh.400, 000 currently earns an ROI of 22%. It can make an additional investment of sh.50, 000 for a five-year life with nil residual value. The average net profit from this investment would be sh.12, 000 after depreciation. The division’s cost of capital is 14%. What are the residual incomes before and after the investment? Select one: A. Sh. 37,000; sh. 32,000 B. Sh. 32,000; sh. 37,000 C. Sh. 47,000, sh. 32,000 D. Sh. 47,000; sh. 37,000

A division with capital employed of sh.400, 000 currently earns an ROI of 22%. It can make an additional investment of sh.50, 000 for a five-year life with nil residual value. The average net profit from this investment would be sh.12, 000 after depreciation. The division’s cost of capital is 14%. What are the residual incomes before and after the investment? Select one: A. Sh. 37,000; sh. 32,000 B. Sh. 32,000; sh. 37,000 C. Sh. 47,000, sh. 32,000 D. Sh. 47,000; sh. 37,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 4PB: Banyan Industries has two divisions, a tax rate of 30%, and a minimum rate of return of 20%....

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