Selected sales and operating data for three divisions of a multinational structural engineering firm are provided...

Transcribed Image Text:

Selected sales and operating data for three divisions of a multinational structural engineering firm are provided below: Sales Average operating assets Net operating income Minimum required rate of return Asia Division Europe North America $ 27,000,000 $ 29,000,000 $ 40,000,000 6,750,000 10,400,000 16,000,000 945,000 14% 850,000 10% 1,280,000 16% Required: 1. Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations and round your final answers to the nearest whole percent.) Asia division Europe division North America division ROI % % % 2. Compute the RI for each division. Asia division Europe division North America division RI 3. Assume that each division is presented with an invement opportunity that would yield a 13% rate of return. a. If performance is being measured by ROI, which division(s) will probably accept the opportunity? Reject the opportunity? Asia division Europe division North America division ROI b. If performance is being measured by RI, which division(s) will probably accept the opportunity? Reject the opportunity? Asia division Europe division North America division RI Selected sales and operating data for three divisions of a multinational structural engineering firm are provided below: Sales Average operating assets Net operating income Minimum required rate of return Asia Division Europe North America $ 27,000,000 $ 29,000,000 $ 40,000,000 6,750,000 10,400,000 16,000,000 945,000 14% 850,000 10% 1,280,000 16% Required: 1. Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations and round your final answers to the nearest whole percent.) Asia division Europe division North America division ROI % % % 2. Compute the RI for each division. Asia division Europe division North America division RI 3. Assume that each division is presented with an invement opportunity that would yield a 13% rate of return. a. If performance is being measured by ROI, which division(s) will probably accept the opportunity? Reject the opportunity? Asia division Europe division North America division ROI b. If performance is being measured by RI, which division(s) will probably accept the opportunity? Reject the opportunity? Asia division Europe division North America division RI

Answer rating: 100% (QA)

1 Asia Division Sales 27000000 Average Operating Assets 6750000 Net Operating Income 945000 First le... View the full answer