Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $611,050 $321,300 Total capital employed 4,520,000 3,640,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 7%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
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- Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $653,400 $330,750 Total capital employed 4,560,000 3,705,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 7%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $623,150 $327,600 Total capital employed 4,320,000 3,672,500 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 9%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division.$ 2. Calculate the residual income for the Jefferson Division.$Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $726,000 $327,600 Total capital employed 4,280,000 3,412,500 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 11%. Calculate the residual income for the Adams Division Calculate the residual income for the Jefferson Division
- Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $683,650 $330,750 Total capital employed 4,760,000 3,315,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 8%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division.$fill in the blank 1 2. Calculate the residual income for the Jefferson Division.$fill in the blank 2Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $641,300 $378,000 Total capital employed 4,200,000 3,282,500 Washington's actual cost of capital was 12%. Required: 1. Calculate the EVA for the Adams Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 2. Calculate the EVA for the Jefferson Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 3. Conceptual Connection: Is each division creating or destroying wealth? Adams Division Jefferson Division 4. Describe generally the types of actions that Washington’s management team could take to increase Jefferson Division’s EVA? Increase the after-tax operating profit that is generated from using the same amount of invested capital. Continue…Coolbrook Company has the following information available for the past year: River Stream Division Division Sales revenue $1,200,000 900,000 $1,800,000 1,300,000 Cost of goods sold and operating expenses Net operating income $ 300,000 $ 500,000 Average invested assets $1,200,000 $1,800,000 The company's hurdle rate is 6 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 10 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $100,000 additional income per division. d. Coolbrook changes its hurdle rate to 10 percent. Complete this question by entering your answers in the tabs below. Req 1 Reg 2A Req 28 Reg 20 Reg 2D Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI…
- Supply the missing data for three service companies shown in the table below: Note: Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent. Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income A Company B C $ 9,450,000 $ $ 7,750,000 329,000 $ 5,175,000 $ 3,150,000 $ 2,070,000 11 % 14 % % 9% $ 376,000 % 14 % $ 103,500Determining missing items in return and residual income computations Data for Uberto Company are presented in the following table 'of returns on investment and residual incomes: Invested Income from Return on Minimum Minimum Acceptable Residual Operations Investment Return Income from Operations Income Assets $925,000 $185,000 (a) 15% (b) (c) $775,000 (d) (e) (f) $93,000 $23,250 $450,000 (g) 18% (h) $58,500 (i) $610,000 $97,600 (j) 12% (k) (1) Determine the missing values, identifying each item by the appropriate letter.Dickonson Products is a division of a major corporation. The following data are for the last year of operations: Sales... $16,640,000 $399,360 Net operating income Average operating assets $4,000,000 The company's minimum required rate of return. 18% The division's residual income is closest to: Select one: a. $(320,640) b. $1,119,360 c. $399,360 d. $(2,595,840)
- The Magazine Division of XYZ publication Company had the following financial data for the year: Assets available for use P 1,000,000 BV P1,500,000 MV Residual income P 100,000 Return on investment 15% A. What was the Magazine Division’s segment income? B. If the manager of the Magazine Division is evaluated based on return on investment, how much would she willing to pay for an investment that promise to increase net segment income by P50,000?Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,209,000 $ 1,810,000 Cost of goods sold and operating expenses 900,000 1,286,000 Net operating income $ 309,000 $ 524,000 Average invested assets $ 1,200,000 $ 1,460,000 The company’s hurdle rate is 6.26 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) river steam ROI % % Residual income (loss) 2. Recalculate ROI and residual income for the division for each independent situation that follows: Operating income increases by 11 percent. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss…GGX is the general manager of the Jung Division, and his performance is measured using the residual income method. GGX is reviewing the following forecasted information for the division for next year. Category Amount (thousands) Working capital P 1,800 Revenue 30,000 Plant and equipment 17,200 To establish a standard of performance for the division’s manager using the residual income approach, four scenarios are being considered. Scenario 1 assumes an imputed interest charge of 12% and a target residual income of P1,500,000. Scenario 2 assumes an imputed interest charge of 15% and a target residual income of P2,000,000. Scenario 3 assumes an imputed interest charge of 18% and a target residual income of P1,250,000. Scenario 4 assumes an imputed interest charge of 10% and a target residual income of P2,500,000. What is the residual income for scenario 2?