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Operating Oper Lvisions =inter pier Assets Inc $ 580,000 850,000 400,000 $ 99 98 58 Total $1,830,000 $256 npbell headquarters has $124,00C

Operating Oper Lvisions =inter pier Assets Inc $ 580,000 850,000 400,000 $ 99 98 58 Total $1,830,000 $256 npbell headquarters has $124,00C

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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Campbell Technologies, Inc. has three divisions. Campbell has a desired rate of return of 13.0 percent. The operating assets and income for each division are as follows: THI Operating Operating Divisions Assets Income $ 99,760 98,600 58,000 Printer $ 580,000 850,000 400,000 Copier Fax Total $1,830,000 $256,360 Campbell headquarters has $124,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 14.5% Copier 13.5% Fax 12.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $124,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $124,000 of investment funds? d. Which division offers the best investment opportunity for Campbell? g. Calculate the residual income: (1) At the corporate (headquarters) level before the additional investment. (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Complete this question by entering your answers in the tabs below. Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the residual income at the corporate (headquarters) level before the additional investment. Residual income < Req A2 to D Req G2 to G4 >
Transcribed Image Text:Campbell Technologies, Inc. has three divisions. Campbell has a desired rate of return of 13.0 percent. The operating assets and income for each division are as follows: THI Operating Operating Divisions Assets Income $ 99,760 98,600 58,000 Printer $ 580,000 850,000 400,000 Copier Fax Total $1,830,000 $256,360 Campbell headquarters has $124,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 14.5% Copier 13.5% Fax 12.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $124,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $124,000 of investment funds? d. Which division offers the best investment opportunity for Campbell? g. Calculate the residual income: (1) At the corporate (headquarters) level before the additional investment. (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Complete this question by entering your answers in the tabs below. Req A1 Req A2 to D Req G1 Req G2 to G4 Calculate the residual income at the corporate (headquarters) level before the additional investment. Residual income < Req A2 to D Req G2 to G4 >
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