Question

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

.:.
(1) Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?
(2) Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?
(3) Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on assets. Should the new investment opportunity be accepted? Explain.



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  • CreatedNovember 29, 2013
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