opportunities that is made available to their company. The following information was presented for decision making. Project Stark (RM) 985,000 Project Tully (RM) 1,000,000 254,000 2,200,000 Project Tyrel (RM) 920,000 281,200 Sales Fixed expenses Operating assets 213,750 1,840,000 1,980,000 Additional information:
opportunities that is made available to their company. The following information was presented for decision making. Project Stark (RM) 985,000 Project Tully (RM) 1,000,000 254,000 2,200,000 Project Tyrel (RM) 920,000 281,200 Sales Fixed expenses Operating assets 213,750 1,840,000 1,980,000 Additional information:
opportunities that is made available to their company. The following information was presented for decision making. Project Stark (RM) 985,000 Project Tully (RM) 1,000,000 254,000 2,200,000 Project Tyrel (RM) 920,000 281,200 Sales Fixed expenses Operating assets 213,750 1,840,000 1,980,000 Additional information:
A) Calculate the Return on Investment (ROI) for each of the portfolio.
B) Based on the required rate of return, determine the Residual Income (RI) for each of the portfolio.
C) If King Bhd is to choose only ONE (1) portfolio to invest in, advise the management team based of your answer in (a).
Please provide a calculation for each of them.
Transcribed Image Text:Kings Bhd under its strategic planning units is considering several investment
opportunities that is made available to their company. The following information was
presented for decision making.
Project Stark
(RM)
985,000
Project Tully
(RM)
1,000,000
254,000
2,200,000
Project Tyrel
(RM)
920,000
281,200
1,980,000
Sales
Fixed expenses
Operating assets
213,750
1,840,000
Additional information:
(i)
The contribution margin recorded for each project is 65% of their sales values.
(ii)
Required rate of return for each project is 15%.
Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
