Exercise 10-12 Evaluating New Investments Using Return on Investment (ROI) and Residual Income (LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 6,300,000 $ 1,260,000 340,200 Division B $ 10,300,000 $ 5,150,000 %24 Division C $ 9,400,000 $ 1,880,000 249,100 17.00% Sales Average operating assets Net operating income Minimum required rate of return 968,200 18.80% 2$ 20.00%
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- Exercise 11-14 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,920,000 $ 28,920,000 $ 26,150,000 Average operating assets $ 3,230,000 $ 7,230,000 $ 5,230,000 Net operating income $ 516,800 $ 462,720 $ 758,350 Minimum required rate of return 7.00% 7.50% 14.50% 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 8% 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?Q7 Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 1,500,000 $ 1,000,000 Operating Income $ 600,000 $ 450,000 Investment $ 4,000,000 $ 2,750,000 If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide? Multiple Choice Division P will not invest; Division Q will invest. Division P will invest; Division Q will not invest. Neither unit will invest in the projects. Division P will be indifferent; Division Q will not invest. Division P will invest; Division Q will be indifferent.Exercise 10-12 (Algo) Evaluating New Investments Using Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Net operating income Minimum required rate of return Required: Division A $ 12,630,000 Division B $ 14,735,000 Division C $ 26,312,500 $ 3,157,500 $ 631,500 $ 7,367,500 $ 589,400 $ 5,262,500 $ 842,000 14% 10% 16% 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or…
- Question 5: Presented below is selected information for three regional divisions of Medina Company. Divisions North Wets South Contribution Margin $ 300,000 $ 500,000 $ 400,000 Controllable margin $ 150,000 $ 400,000 $ 225,000 Average operating asset $1,000,000 $ 2,000,000 $1,500,000 Minimum rate of return 13% 16% 10% Instructions Compute the return on investment for each Compute the residual income for each Assume that each division has an investment opportunity that would provide a rate of return of 19%. If ROI is used to measure performance, which division or divisions will probably make the additional investment? If residual income is used to measure performance, which division or divisions will probably…Exercise 11-9 (Algo) Return on Investment (ROI) and Residual Income Relations [LO11-1, LO11-2] 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 (RO Minimum required rate of return. Percentage Dollar amount Residual income A Company B C S 9,240,000 S 7.400.000 S 306,000 $ 4,880.000 S 3,080,000 S 1,944.000 15 % 18 % 96 13 % 96 S 340,000 18 96 $ 97.200Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales 12440000$ 35550000$ 25550000$ Average operating assets 3110000$ 7110000$ 5110000$ Net operating income 547360$ 639900$ 740950$ Minimum required rate of return 10.00% 10.50% 14.50$ Required: 1.Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2.Compute the residual income for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 11% rate of return. a.If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? b.If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject?
- Exercise 15-19 (Algo) Investment center analysis; ROI and residual income LO 15-9 The Northern Division of Allied Incorporated has operating income of $18,500 on sales revenue of $166,000. Divisional operating assets are $80,200, and management of Allied has determined that a minimum return of 13% should be expected from all investments. Required: a. Using the DuPont model, calculate the Northern Division's margin, turnover, and ROI. b. Calculate the Northern Division's residual income. Complete this question by entering your answers in the tabs below. Required A Required B Using the DuPont model, calculate the Northern Division's margin, turnover, and ROI. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Margin Turnover ROI Northern Division % turns %Question 10.2 Provide the missing data for the following situations: Red Division White Division Green Division Sales A $10,000,000 E Net operating income $240,000 $500,000 $288,000 Total assets B C $1,600,000 Return on investment 0.16 0.10 F Return on sales 0.05 D 0.14Q23 Selected data from Box Division's accounting records revealed the following: Sales $ 345,060 Average investment $ 200,100 Net operating income $ 24,300 Minimum rate of return (divisional cost of capital) 11% Box Division's return on sales (ROS) is: (Round your percentages to one decimal place.) Multiple Choice 11.1%. 4.1%. 7.0%. 19.2%. 12.1%.
- Chapter 10 Homework 10 Sales Average operating assets Net operating income Minimum required rate of return Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division B $ 14,700,000 $ 7,350,000 $588,000 Division C $26,250,000 $ 5,250,000 $ 840,000 16% Req 1 Reg 2 Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity Residual income (loss) Check my work mode: This shows what is correct or incorrect for the work you have co Complete this…7. Jordan Company has two divisions, which reported the following results for the most recent year. Division I Division II Income ₱ 02,700,000 ₱ 00,600,000 Average invested capital ₱ 18,000,000 ₱ 03,000,000 ROI 15% 20% Imputed interest rate = 10% Under residual income, which division is considered to have a better performance? Show solution Group of answer choices Neither Division I nor II Cannot be determined Division I Division IIQUESTION 4 The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000 The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed b. Residual income