information was provided on several investment portfolio opportunity based Baelish corporation is considering an investment opportunity....
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information was provided on several investment portfolio opportunity based Baelish corporation is considering an investment opportunity. The following on their past performance. Sales (RM) Contribution margin (RM) Operating assets (RM) Minimum required rate of return (%) Project Marine 125,400 63,200 252,800 10 Project Air 185,400 80,066 326,800 12 Project Hill 220,400 142,076 645,800 15 The fixed expenses recorded on each project is equivalent to 10% on the value of their operating assets. Required: (a) Calculate the Return on Investment (ROI) for each of the portfolio. (b) Based on the required rate of return, determine the Residual Income (RI) for each of the portfolio. (c) If Baelish corporation is to choose only ONE (1) portfolio to invest in, advise the management team based of your answer in (a). (e) (f) (c) If Baelish corporation is to choose only ONE (1) portfolio to invest in, advise the management team based of your answer in (a). (d) Assume that Baelish corporation received another investment opportunity that could generate 14% return on investment, determine whether each project should be accepted or rejected under ROI approach. Suggest THREE (3) ways in which the least profitable investment portfolio may increase the value of its ROI. Based on your opinion, is ROI or RI a better portfolio performance measurement for investor to consider? information was provided on several investment portfolio opportunity based Baelish corporation is considering an investment opportunity. The following on their past performance. Sales (RM) Contribution margin (RM) Operating assets (RM) Minimum required rate of return (%) Project Marine 125,400 63,200 252,800 10 Project Air 185,400 80,066 326,800 12 Project Hill 220,400 142,076 645,800 15 The fixed expenses recorded on each project is equivalent to 10% on the value of their operating assets. Required: (a) Calculate the Return on Investment (ROI) for each of the portfolio. (b) Based on the required rate of return, determine the Residual Income (RI) for each of the portfolio. (c) If Baelish corporation is to choose only ONE (1) portfolio to invest in, advise the management team based of your answer in (a). (e) (f) (c) If Baelish corporation is to choose only ONE (1) portfolio to invest in, advise the management team based of your answer in (a). (d) Assume that Baelish corporation received another investment opportunity that could generate 14% return on investment, determine whether each project should be accepted or rejected under ROI approach. Suggest THREE (3) ways in which the least profitable investment portfolio may increase the value of its ROI. Based on your opinion, is ROI or RI a better portfolio performance measurement for investor to consider?
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To answer this question we will need to perform a series of calculations for each project Return on Investment ROI and Residual Income RI Ill guide you through these calculations step by step a Calcul... View the full answer
Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
Posted Date:
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