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n ROI, which division is more successful"

n ROI, which division is more successful"

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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Consider the following data (in millions) from Trident Financial Incorporated, which has two main divisions, mortgage loans and consumer loans: Mortgage Consumer Loans Loans Average total assets Operating income Return on investment (ROI) $ 2,500 $ 530 $ 17,750 $ 2,485 21.20% 14.00% Required: 1. Based on ROI, which division is more successful? Mortgage loans Consumer loans 2. Trident uses residual income (RI) as a measure of the financial performance of its divisions. What is the RI for each division if the minimum desired rate of return is (a) 10%, (b) 15%, and (c) 20%? (Leave no cells blank. Negative amounts should be indicated by a minus sign. Enter your answers in millions.) Residual Income (RI) Mortgage Loans Consumer Loans (а) 10% |(b) 15% (c) 20%
Transcribed Image Text:Consider the following data (in millions) from Trident Financial Incorporated, which has two main divisions, mortgage loans and consumer loans: Mortgage Consumer Loans Loans Average total assets Operating income Return on investment (ROI) $ 2,500 $ 530 $ 17,750 $ 2,485 21.20% 14.00% Required: 1. Based on ROI, which division is more successful? Mortgage loans Consumer loans 2. Trident uses residual income (RI) as a measure of the financial performance of its divisions. What is the RI for each division if the minimum desired rate of return is (a) 10%, (b) 15%, and (c) 20%? (Leave no cells blank. Negative amounts should be indicated by a minus sign. Enter your answers in millions.) Residual Income (RI) Mortgage Loans Consumer Loans (а) 10% |(b) 15% (c) 20%
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