Exercise 10-12 Evaluating New Investments Using Return on Investment (ROI) and Residual Income(LO10-1, LO10-2]Selected sales and operating data for three divisions of different structural engineering firms are given as follows:Division A$ 6,300,000$ 1,260,000340,200Division B$ 10,300,000$ 5,150,000968,20018.80%Division C$ 9,400,000$ 1,880,00024SalesAverage operating assetsNet operating incomeMinimum required rate of return2$249,10020.00%17.00%Required:1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.2. Compute the residual income (loss) for each division.3. Assume that each division is presented with an investment opportunity that would yield a 20% rate of return.a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3AReq 3BCompute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Do notround intermediate calculations. Round your answers to 2 decimal places.)MarginTurnoverROIDivision A%Division B%Division C%%< Req 1IReq 2 >

Exercise 10-12 Evaluating New Investments Using Return on Investment (ROI) and Residual Income (LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 6,300,000 $ 1,260,000 340,200 Division B $ 10,300,000 $ 5,150,000 %24 Division C $ 9,400,000 $ 1,880,000 249,100 17.00% Sales Average operating assets Net operating income Minimum required rate of return 968,200 18.80% 2$ 20.00%

Exercise 10-12 Evaluating New Investments Using Return on Investment (ROI) and Residual Income (LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 6,300,000 $ 1,260,000 340,200 Division B $ 10,300,000 $ 5,150,000 %24 Division C $ 9,400,000 $ 1,880,000 249,100 17.00% Sales Average operating assets Net operating income Minimum required rate of return 968,200 18.80% 2$ 20.00%

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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10q-2
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QUESTION 26 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 1 Sales $10,000,000 Operating income 200,000 Average operating assets 2,000,000 Required: Compute the Residual Income assuming a minimum required rate of return of 8%. $40,000 $0 $50,000 $(40,000)
Exercise 11-11 (Algo) Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO11-1] Posters.com is an Internet retailer of high-quality posters. The company has $790,000 in operating assets and fixed expenses of $160,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,300,000 per year. The company's contribution margin ratio is 11%, which means an additional dollar of sales results in additional contribution margin. and net operating income, of 11 cents. Required: 1. Complete the following table showing the relation between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table showing the relation between sales and return on investment (ROI). Note: Round your percentage answers to 2 decimal places. Sales Net Operating Income Average Operating…
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10q-3
QUESTION 25 Top management is trying to determine which would be the best choice of the following: Data of investment choices: 1 Sales $10,000,000 Operating income 200,000 Average operating assets 2,000,000 Required: Compute the Return on Investment 9% 12% 8% 10%
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10q-1
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