Homework Answers
C.
| ROI | 23.02% |
Working:
| ROI = Operating Income / Operating Assets |
| =$41590/ (190226-9600) |
| 23.03% |
D.
| New ROI | 20.60% |
Working:
| Current operating assets | $ 180,626.00 |
| plus: new investment | $ 95,000.00 |
| Total operating assets (A) | $ 275,626.00 |
| Current operating income | $ 41,590.00 |
| Income from new investment | $ 15,200.00 |
| (16% of 95,000) | |
| New operating income (B) | $ 56,790.00 |
| New ROI (B / A) | 20.60% |
E.
| Residual income | $ 16,302.36 |
| Working: | |
| Current operating assets | $ 180,626.00 |
| Desired ROI | 14% |
| Desired operating profit | $ 25,287.64 |
| Actual operating profit | $ 41,590.00 |
| Residual income | $ 16,302.36 |
| New Residual income | $ 18,202.36 |
| Working: | |
| New operating assets | $ 275,626.00 |
| Desired ROI | 14% |
| Desired operating profit | $ 38,587.64 |
| Actual operating profit | $ 56,790.00 |
| New Residual income | $ 18,202.36 |
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