Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate...
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Accounting
Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.51 percent. Selected operating data for the three divisions follow:
Peak
View
Grand
Sales revenue
$
337,000
$
224,000
$
302,000
Cost of goods sold
197,000
105,000
182,000
Miscellaneous operating expenses
44,000
34,000
39,000
Average invested assets
1,210,000
910,000
1,095,000
Required:1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
Peak
View
Grand
Return on Investment
%
%
%
2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.)
Peak
View
Grand
Residual Income (Loss)
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