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Return on investment and residual income Welch Insurance Company (WIC) earned operating income of $24,000,000 on...
Franklin Home Maintenance Company earned operating income of $6,387,400 on operating assets of $58,600,000 during Year...
Franklin Home Maintenance Company earned operating income of $6,387,400 on operating assets of $58,600,000 during Year 2. The Tree Cutting Division earned $1,155,840 on operating assets of $6,880,000. Franklin has offered the Tree Cutting Division $2,120,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $424,000. Franklin has a desired return on investment (ROI) of 8.90 percent. Calculate the residual income for Franklin, the Tree...
Adams Home Maintenance Company earned operating income of $6,415,200 on operating assets of $59,400,000 during Year...
Adams Home Maintenance Company earned operating income of $6,415,200 on operating assets of $59,400,000 during Year 2. The Tree Cutting Division earned $1,229,980 on operating assets of $6,910,000. Adams has offered the Tree Cutting Division $2,150,000 of addltional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $445,050. Adams has a desired return on investment (RO) of 8.80 percent. Required a. Calculate the return on investment for...
ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $7...
ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent. (a) Compute the return on investment. (Round your answer to three decimal places.) (b) Compute the residual income. (c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $950,000 investment in assets. 1. Compute the Mustang Division's return...
Solomon Company has operating assets of $19,000,000. The company's operating income for the most recent accounting...
Solomon Company has operating assets of $19,000,000. The company's operating income for the most recent accounting period was $2,620,000. The Dannica Division of Solomon controls $8,170,000 of the company's assets and earned $1,240,000 of its operating income. Solomon's desired ROI is 9 percent. Solomon has $1,120,000 of additional funds to invest. The manager of the Dannica division believes that his division could earn $143,000 on the additional funds. The highest investment opportunity to any of the company's other divisions is...
Question 1: Return on investment (ROI), residual income (RI) Generic Motors Corporation has two divisions. Division...
Question 1: Return on investment (ROI), residual income (RI) Generic Motors Corporation has two divisions. Division A Division B Investment (operating assets) | $400,000 $1,600,000 Profit $72,000 $224,000 The required rate of return (cost of capital) is 10% a year. a) Compute return on investment (ROI) for each division. ROI for A = % (if your answer is 9.5%, enter 9.5 without the percent sign) ROI for B = % b) Compute the residual income (RI) for each division. RI...
Gibson Company has operating assets of $20,400,000. The company's operating income for the most recent accounting...
Gibson Company has operating assets of $20,400,000. The company's operating income for the most recent accounting period was $2,670,000. The Dannica Division of Gibson controls $7,560,000 of the company's assets and earned $1,200,000 of its operating income. Gibson's desired ROI is 100 percent. Gibson has $1,080,000 of additional funds to invest. The manager of the Dannica division believes that his division could earn $145,000 on the additional funds. The highest investment opportunity to any of the company's other divisions is...
Return on investment The operating income and the amount of invested assets in each division of...
Return on investment The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets Retail Division Commercial Division Internet Division $9,600,000 12,100,000 $40,000,000 55,000,000 6,480,000 36,000,000 a. Compute the return on investment for each division Division Percent Retail Division Commercial Division Internet Division b. Which division is the most profitable per dollar invested? Residual Income The operating income and the amount of invested assets in each division of Conley...
ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had...
ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $900,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent. (a) Compute the return on investment. (Round your answer to three decimal places.) 22.5 (b) Compute the residual income. $ 260,000 (c) The Mustang Division has an opportunity to increase operating income by $250,000 with an $750,000 investment in assets. 1. Compute the...
Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on...
Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first is an air conditioner for the back seats of vans and minivans. The second is a turbocharger. Without the investments, the division will have average assets for the coming year of $29.4 million and expected operating income of $4.335 million. The outlay required for each...
Evaluating New Investments Using Return on Investment (ROI) and Residual Income Three divisions of Watcore Inc....
Evaluating New Investments Using Return on Investment (ROI) and Residual Income Three divisions of Watcore Inc. report the following sales and operating data: Division A Division B Division C Sales . . .... . . . . . .. . .. .. $6,000,000 $10,000,000 $8,000,000 Average operating assets . . . $1,500,000 $5,000,000 $2,000,000 Operating income ... .... . . $300,000 $900,000 $180,000 Minimum required rate of return. 15% 18% 12% Required: 1. Compute the return...
Adams Home Maintenance Company earned operating income of $6,415,200 on operating assets of $59,400,000 during Year 2. The Tree Cutting Division earned $1,229,980 on operating assets of $6,910,000. Adams has offered the Tree Cutting Division $2,150,000 of addltional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $445,050. Adams has a desired return on investment (RO) of 8.80 percent. Required a. Calculate the return on investment for...
Solomon Company has operating assets of $19,000,000. The company's operating income for the most recent accounting period was $2,620,000. The Dannica Division of Solomon controls $8,170,000 of the company's assets and earned $1,240,000 of its operating income. Solomon's desired ROI is 9 percent. Solomon has $1,120,000 of additional funds to invest. The manager of the Dannica division believes that his division could earn $143,000 on the additional funds. The highest investment opportunity to any of the company's other divisions is...
Question 1: Return on investment (ROI), residual income (RI) Generic Motors Corporation has two divisions. Division A Division B Investment (operating assets) | $400,000 $1,600,000 Profit $72,000 $224,000 The required rate of return (cost of capital) is 10% a year. a) Compute return on investment (ROI) for each division. ROI for A = % (if your answer is 9.5%, enter 9.5 without the percent sign) ROI for B = % b) Compute the residual income (RI) for each division. RI...
Gibson Company has operating assets of $20,400,000. The company's operating income for the most recent accounting period was $2,670,000. The Dannica Division of Gibson controls $7,560,000 of the company's assets and earned $1,200,000 of its operating income. Gibson's desired ROI is 100 percent. Gibson has $1,080,000 of additional funds to invest. The manager of the Dannica division believes that his division could earn $145,000 on the additional funds. The highest investment opportunity to any of the company's other divisions is...
Return on investment The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets Retail Division Commercial Division Internet Division $9,600,000 12,100,000 $40,000,000 55,000,000 6,480,000 36,000,000 a. Compute the return on investment for each division Division Percent Retail Division Commercial Division Internet Division b. Which division is the most profitable per dollar invested? Residual Income The operating income and the amount of invested assets in each division of Conley...
ROI and Residual Income: Impact of a New Investment The Mustang Division of Detroit Motors had an operating income of $900,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent. (a) Compute the return on investment. (Round your answer to three decimal places.) 22.5 (b) Compute the residual income. $ 260,000 (c) The Mustang Division has an opportunity to increase operating income by $250,000 with an $750,000 investment in assets. 1. Compute the...
Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first is an air conditioner for the back seats of vans and minivans. The second is a turbocharger. Without the investments, the division will have average assets for the coming year of $29.4 million and expected operating income of $4.335 million. The outlay required for each...
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