Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets Orange has established a hurdle rate of 6 percent. Required: 1-a. Compute each division's return on investment (ROI) and residual income for last year. 1-b. Determine which manager seems to be performing better. Req 1A 2. Suppose Orange is investing in new technology that will increase each division's operating income by $131,000. The total investment required is $2,200,000, which will be split evenly between the two divisions. Calculate the ROI and residual income for each division after the investment is made. 3. Determine whether both managers will support the investment. Req 1B Complete this question by entering your answers in the tabs below. $ 1,740,000 1,392,000 $ 348,000 $ 3,480,000 Req 2 ROI Residual Income (Loss) Fruit Division Saved % $ 2,610,000 1,957,500 $ 652,500 $ 2,718,750 Req 3 Compute each division's return on investment (ROI) and residual income for last year. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.) Flower Division %
Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets Orange has established a hurdle rate of 6 percent. Required: 1-a. Compute each division's return on investment (ROI) and residual income for last year. 1-b. Determine which manager seems to be performing better. Req 1A 2. Suppose Orange is investing in new technology that will increase each division's operating income by $131,000. The total investment required is $2,200,000, which will be split evenly between the two divisions. Calculate the ROI and residual income for each division after the investment is made. 3. Determine whether both managers will support the investment. Req 1B Complete this question by entering your answers in the tabs below. $ 1,740,000 1,392,000 $ 348,000 $ 3,480,000 Req 2 ROI Residual Income (Loss) Fruit Division Saved % $ 2,610,000 1,957,500 $ 652,500 $ 2,718,750 Req 3 Compute each division's return on investment (ROI) and residual income for last year. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.) Flower Division %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
5
Transcribed Image Text:Sales revenue
Cost of goods sold and operating expenses
Net operating income
Average invested assets
Req 1A
Req 1B
Orange has established a hurdle rate of 6 percent.
Required:
1-a. Compute each division's return on investment (ROI) and residual income for last year.
1-b. Determine which manager seems to be performing better.
2. Suppose Orange is investing in new technology that will increase each division's operating income by $131,000. The total
investment required is $2,200,000, which will be split evenly between the two divisions. Calculate the ROI and residual income for
each division after the investment is made.
3. Determine whether both managers will support the investment.
Complete this question by entering your answers in the tabs below.
Req 2
ROI
Residual Income (Loss)
$ 1,740,000
1,392,000
$ 348,000
$ 3,480,000
Fruit Division
%
Req 3
Compute each division's return on investment (ROI) and residual income for last year.
Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e.,
0.1234 should be entered as 12.34%.)
Saved
$ 2,610,000
1,957,500
$ 652,500
$ 2,718,750
Flower Division
%
L
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