Exercise 11-14 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Resi Income [LO11-1, LO11-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets Net operating income Minimum required rate of return Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00% Division B $ 35,200,000 $ 7,040,000 $ 563,200 9.50% Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. that each division is presented with an investment opportunity that would yield a 10% rate of return. portunity?
Exercise 11-14 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Resi Income [LO11-1, LO11-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets Net operating income Minimum required rate of return Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00% Division B $ 35,200,000 $ 7,040,000 $ 563,200 9.50% Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. that each division is presented with an investment opportunity that would yield a 10% rate of return. portunity?
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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Please help with 1-3 thank you!!!
![Exercise 11-14 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual
Income [LO11-1, LO11-2]
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Sales
Average operating assets
Net operating income
Minimum required rate of return
Required:
1. Compute the margin, turnover, and return on
2. Compute the residual income (loss) for each division.
Req 1
3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Complete this question by entering your answers in the tabs below.
Req 2
Division A
Division A
$ 15,200,000
$ 3,040,000
$ 668,800
9.00%
Margin
Req 3A
0/
Turnover
Division B
$ 35,200,000
$ 7,040,000
$ 563,200
9.50%
investment (ROI) for each division.
Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Req 3B
Division C
$ 25,200,000
$ 5,040,000
$ 655,200
13.00%
ROI
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Transcribed Image Text:Exercise 11-14 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual
Income [LO11-1, LO11-2]
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Sales
Average operating assets
Net operating income
Minimum required rate of return
Required:
1. Compute the margin, turnover, and return on
2. Compute the residual income (loss) for each division.
Req 1
3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Complete this question by entering your answers in the tabs below.
Req 2
Division A
Division A
$ 15,200,000
$ 3,040,000
$ 668,800
9.00%
Margin
Req 3A
0/
Turnover
Division B
$ 35,200,000
$ 7,040,000
$ 563,200
9.50%
investment (ROI) for each division.
Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Req 3B
Division C
$ 25,200,000
$ 5,040,000
$ 655,200
13.00%
ROI
0/
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