60.1K

Verified Solution

Link Copied!

Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating asseta Net operating income Minimum required rate of return Division A $16,000,000 $ 3,200,000 $ 752,000 9.000 Division B $ 36,000,000 $ 7,200,000 $ 576,000 9.500 Division C $ 20,800,000 $ 5,200,000 $ 540,800 10.400 Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual Income, which division or divisions will probably accept the opportunity? Complete this question by entering your answers in the tabs below. Rea 1 Reg 2 Reg 3A Reg 38 Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round Intermediate calculations Round your answers to 2 decimal places.) Margin Turnover ROI Division A % Division B % Division % % % Req 1 Reg 2 Req Reg 33 Compute the residual income (loss) for each division. (Do not round Intermediate calculations. Loss amo Indicated by a minus sign.) Division A Division B Division C Residual income (loss) Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Rbq 3A Red 3B Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A Division B Division Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Ren 38 Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division Division

Answer & Explanation Solved by verified expert

See Answer