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An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals Capital required Annual operating return $ 180,000 16, 200 $ 96, 000 $ 60,000 20,400 24,960 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROl for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below.

An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals Capital required Annual operating return $ 180,000 16, 200 $ 96, 000 $ 60,000 20,400 24,960 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROl for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Performance roi
An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals Capital required Annual operating return $ 96,000 24,960 $ 60, 000 20,400 $ 180, 000 16, 200 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below. Reg A1 Req A2 Reg B1 Reg B2 Reg B1 Assume you are the investment center manager. Calculate the residual income for each project? Project A Project B Project C Residual income < Reg A1 Req A2 > < Prev 2 of 5 Next > a rch +66
Transcribed Image Text:An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals Capital required Annual operating return $ 96,000 24,960 $ 60, 000 20,400 $ 180, 000 16, 200 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below. Reg A1 Req A2 Reg B1 Reg B2 Reg B1 Assume you are the investment center manager. Calculate the residual income for each project? Project A Project B Project C Residual income < Reg A1 Req A2 > < Prev 2 of 5 Next > a rch +66
Exercise 25.5 (Static) Performance and ROI versus Residual Income (LO25-2, LO25-3, LO25-4) An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals B Capital required Annual operating return $ 96,000 24,960 $ 60,000 $ 180,000 20,400 16, 200 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B1 Reg B2 Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? Project A Project B Project C ROI % < Req A2 Req B2 > < Prev 2 of 5 Next > 99 ch %23
Transcribed Image Text:Exercise 25.5 (Static) Performance and ROI versus Residual Income (LO25-2, LO25-3, LO25-4) An investment center in Shellforth Corporation was asked to identify three proposals for its capital budget. Details of those proposals are as follows. Capital Budget Proposals B Capital required Annual operating return $ 96,000 24,960 $ 60,000 $ 180,000 20,400 16, 200 Shellforth uses residual income to evaluate all capital budgeting projects. Its minimum required return is 10 percent. a-1. Assume you are the investment center manager. Calculate the residual income for each project? a-2. Which project do you prefer? b-1. Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? b-2. Would your preferences for the projects listed change? Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B1 Reg B2 Assume your investment center's current ROI is 18 percent and that the president of Shellforth is thinking about using ROI for the investment center's evaluation. Calculate the ROI for each project? Project A Project B Project C ROI % < Req A2 Req B2 > < Prev 2 of 5 Next > 99 ch %23
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