Please send answer in chart set upMegamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment CenterSales Income AverageInvested AssetsElectronics$39,840,000 $2,988,000 $16,600,000 Sporting goods 25,200,000 2,142,000 12,600,000 1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?2. Assume a target income level of 11% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted? Compute return on investment for each department. Using return on investment, which department is most efficient at usingassets to generate returns for the company?Return on InvestmentI Choose Denominator:= Return on InvestmentChoose Numerator:Return on InvestmentElectronicsSporting GoodsWhich department is most efficient at using assets to generate returns for thecompany?Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Assume a target income level of 11% of average invested assets. Compute residual income for each department. Whichdepartment generated the most residual income for the company?Investment CenterElectronics Sporting GoodsNet incomeTarget net incomeResidual incomeWhich department is most efficient at usingassets to generate returns for the company?Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return oninvestment. Should the new investment opportunity, be accepted?Should the new investment opportunity be accepted?II

Solution: (1). Return on investment Choose numerator / Choose denominator = Return on…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Please send answer in chart set up

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

Investment Center	Sales		Income		Average Invested Assets
Electronics	$	39,840,000		$	2,988,000	$	16,600,000
Sporting goods		25,200,000			2,142,000		12,600,000

1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?
2. Assume a target income level of 11% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?
3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted?

Compute return on investment for each department. Using return on investment, which department is most efficient at using
assets to generate returns for the company?
Return on Investment
I Choose Denominator:
= Return on Investment
Choose Numerator:
Return on Investment
Electronics
Sporting Goods
Which department is most efficient at using assets to generate returns for the
company?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Assume a target income level of 11% of average invested assets. Compute residual income for each department. Which
department generated the most residual income for the company?
Investment Center
Electronics Sporting Goods
Net income
Target net income
Residual income
Which department is most efficient at using
assets to generate returns for the company?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on
investment. Should the new investment opportunity, be accepted?
Should the new investment opportunity be accepted?
II

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