Stuart Technologies, Inc. has three divisions. Stuart has a desired rate of return of 11.0 percent. The operating assets and income for each division are as follows: Operating Assets Operating Divisions Income $ 690,000 960,000 510,000 Printer $110,400 100,800 Copier Fax 68,340 Total $2,160,000 $279,540 Stuart headquarters has $135,000 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 12.5% 11.5% Printer Copier Fax 10.5% 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 $135,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $135,000 of investment funds?

Stuart Technologies, Inc. has three divisions. Stuart has a desired rate of return of 11.0 percent. The operating assets and income for each division are as follows: Operating Assets Operating Divisions Income $ 690,000 960,000 510,000 Printer $110,400 100,800 Copier Fax 68,340 Total $2,160,000 $279,540 Stuart headquarters has $135,000 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 12.5% 11.5% Printer Copier Fax 10.5% 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 $135,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $135,000 of investment funds?

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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