OBrien Vineyards reports the following: Net Operating Income 205,000 Average Operating Assets 1,985,000 Sales 2,575,000...
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OBrien Vineyards reports the following: Net Operating Income 205,000 Average Operating Assets 1,985,000 Sales 2,575,000 Operating Expenses 2,320,000 Minimum Required Rate of Return is 12.25%
1. What is OBrien Vineyards ROI? 2. What is OBrien Vineyards Residual Income? 3. If Vineyard manager, Brant OBrien, is compensated based on ROI, will he want to make an investment of $400,000 that would generate additional net operating income of $75,000 per year? Why or why not. Please show your calculations. 4. If Vineyard manager, Brant OBrien, is compensated based on residual income, will he want to make an investment of $400,000 that would generate additional net operating income of $75,000 per year? Why or why not. Please show your calculations.
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