Required Information [The following information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12% Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Numerator: Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income Investment Center Return on Investment Required 1 Required 2 Required 3 Income $ 3,173,000 2,286,000 Electronics Sporting Goods Which center is most efficient at using assets to generate income? /Denominator: 1 1 1 Required 1 Required 1 Required 2 Required 3 Electronics Average Assets $ 16,700,000 12,700,000 Residual income Which center generated the most residual income? Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the most residual income? < Required 1 = Return on Investment Sporting Goods = Required 2 > Required 3 > Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 12%.
Required Information [The following information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12% Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Numerator: Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income Investment Center Return on Investment Required 1 Required 2 Required 3 Income $ 3,173,000 2,286,000 Electronics Sporting Goods Which center is most efficient at using assets to generate income? /Denominator: 1 1 1 Required 1 Required 1 Required 2 Required 3 Electronics Average Assets $ 16,700,000 12,700,000 Residual income Which center generated the most residual income? Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the most residual income? < Required 1 = Return on Investment Sporting Goods = Required 2 > Required 3 > Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 12%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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