A B C D E F G H 1 J K L M N Problem 2A The Central Division of Miller's Quarter Horse Company has sales of $4,500,000. It also has invested assets of $2,500,000 and operating expenses of $3,800,000. The company has established a minimum rate of return of 7%. Required: A. Determine the following for the Central Division: i) Profit Margin ii) ROI using DuPont formula ii) Residual Income Solution: A. Income from operations Profit margin Investment Turnover ROI Residual Income Problem 2B Miller has offered a new investment opportunity to the Central Division, which has a Return on Investment of 20% calculated as an operating income of $160,000 divided by the invested asset of $800,000. Required: Explain by undertaking required calculation, whether the manager of the Central division would undertake the additional investment opportunity if: He was paid a bonus based upon her division's overall ROI. He was paid a bonus based upon her division's overall RI Solution: If the manager accepts the new investment: Total Operating income Total Invested assets The total ROI of the Central division = Explanation: