Problem 12-36 Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first is an air condi- tioner for the back seats of vans and minivans. The second is a turbocharger. Without the invest- ments, the division will have average assets for the coming year of $28.9 million and expected operating income of $4.335 million. The outlay required for each investment and the expected operating incomes are as follows: Air Conditioner $750,000 90,000 Outlay Operating income (Note: Round all numbers to two decimal places.) Required: 1. Compute the ROI for each investment project. Turbocharger $540,000 82,080

Problem 12-36 Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first is an air condi- tioner for the back seats of vans and minivans. The second is a turbocharger. Without the invest- ments, the division will have average assets for the coming year of $28.9 million and expected operating income of $4.335 million. The outlay required for each investment and the expected operating incomes are as follows: Air Conditioner $750,000 90,000 Outlay Operating income (Note: Round all numbers to two decimal places.) Required: 1. Compute the ROI for each investment project. Turbocharger $540,000 82,080

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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