BC 315: COST ACCTG. EXCEL PROJECT #3: ROI vs. RI X Corp. has two divisions: Print...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
BC 315: COST ACCTG. EXCEL PROJECT #3: ROI vs. RI X Corp. has two divisions: Print and Internet. Financial data (in millions) for 2019 and 2020 are below: PRINT DIVISION: Revenues (2020) = $22,500 Net Operating Income (2020) = $4,500 Operating Assets @ year-end: $18,200 (2019) and $25,000 (2020) INTERNET DIVISION: Revenues (2020) = $23,000 Net Operating Income (2020) = $690 Operating Assets @ year-end: $11,150 (2019) and $10,000 (2020) Top management is considering the use of either ROI [return on investment] or RI [residual income] as a performance measure for its investment centers [divisions]. REQUIRED PART A: 1. Compute the AOA [average operating assets] for each division (both Print and Internet). 2. Compute the Profit Margin ratio (%) for each division (both Print and Internet). 3. Compute the Asset Turnover for each division (both Print and Internet). 4. Using the DuPont model, compute ROI for each division (both Print and Internet). 5. Compute Residual Income [RI] for each division (both Print and Internet) based on average operating assets. Assume the corporate-wide minimum required rate of return is 10%. Assume the Print division [only] is considering a new investment proposal for next year (2021) with the following estimated data [Ignore the Internet division for this requirement]: == Average operating assets needed = $2,580 (in millions) Expected Net Operating Income = $360 (million) REQUIRED PART B: 1. Using the ROI model, compute the ROI % offered by the new project. 2. Based on your answer above, should the Print division invest in this new proposal? Why or why not? 3. Using the Residual Income [RI] model, compute the amount of RI the new project would generate. 4. Based on your answer above, should the Print division invest in this new proposal? Why or why not? BC 315: COST ACCTG. EXCEL PROJECT #3: ROI vs. RI X Corp. has two divisions: Print and Internet. Financial data (in millions) for 2019 and 2020 are below: PRINT DIVISION: Revenues (2020) = $22,500 Net Operating Income (2020) = $4,500 Operating Assets @ year-end: $18,200 (2019) and $25,000 (2020) INTERNET DIVISION: Revenues (2020) = $23,000 Net Operating Income (2020) = $690 Operating Assets @ year-end: $11,150 (2019) and $10,000 (2020) Top management is considering the use of either ROI [return on investment] or RI [residual income] as a performance measure for its investment centers [divisions]. REQUIRED PART A: 1. Compute the AOA [average operating assets] for each division (both Print and Internet). 2. Compute the Profit Margin ratio (%) for each division (both Print and Internet). 3. Compute the Asset Turnover for each division (both Print and Internet). 4. Using the DuPont model, compute ROI for each division (both Print and Internet). 5. Compute Residual Income [RI] for each division (both Print and Internet) based on average operating assets. Assume the corporate-wide minimum required rate of return is 10%. Assume the Print division [only] is considering a new investment proposal for next year (2021) with the following estimated data [Ignore the Internet division for this requirement]: == Average operating assets needed = $2,580 (in millions) Expected Net Operating Income = $360 (million) REQUIRED PART B: 1. Using the ROI model, compute the ROI % offered by the new project. 2. Based on your answer above, should the Print division invest in this new proposal? Why or why not? 3. Using the Residual Income [RI] model, compute the amount of RI the new project would generate. 4. Based on your answer above, should the Print division invest in this new proposal? Why or why not?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Modify BST to add a method rangeCount() that takes two keys as arguments and returns the number of keys in a BST between the two specified keys. Your method should take time proportional to the...
-
Following are a series of statements regarding topics discussed in this chapter. Required: Indicate whether each statement is true (T) or false (F). (a) Financial statements are the principal means...
-
Lata Inc. produces aluminum cans. Each can has a standard labor requirement of 0.04 hour. During the month of May, 500,000 cans were produced using 19,000 labor hours @ $15.50. The standard wage rate...
-
The Family Support Center is a small charitable organization. It has only four full-time employees: two staff, an accountant, and an office manager. The majority of its funding comes from two...
-
Mr. Wiggley wants to buy a new house. It will cost $178,000. The bank will loan 90% of the purchase price at a nominal interest rate of 10.75% compounded weekly, and Mr. Wiggley will make monthly...
-
With regard to the time value of money,A) Question 13 options: A) amounts are adjusted for inflation over the period of the investment. B) the amount of the present value is always higher than the...
-
How is psychodynamic theory related to crime?
-
Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company I paraglider model, but also makes custom-designed paragliders. Management has designed...
-
5.4. List some of the criticisms that can be made of historical cost accounting when it is applied in times of rising prices.
-
For the following Directed Weighted Graph, give Adjacency Matrix representation (use for no edge): A 5 4 D 1 B 10 2 E C 8
-
Draw the mechanisms for this reaction using curved arrow notation OH 1) NaH 2) CH3l 0-
-
Could you please answer these questions step by step using the necessary formula or a finance calculator, if you're using the finance calculator, please let me know the inputs and what did you do....
-
Walnut Ltd. is a Canadian-controlled private corporation whose fiscal period coincides with the calendar year. For the year 2021, the companys taxable income was calculated as follows: Income from...
-
(a) Water flows through the nozzle of a garden hose. Find an expression for m in terms of line pressure P 1 , ambient pressure P 2 , inside hose diameter D 1 , and nozzle outlet diameter D 2 . Assume...
-
Why is an increase in accumulated depreciation on the balance sheet ignored when analyzing the cash flows from investing activities?
-
What does an increase in the balance of accounts payable indicate?
-
The consistency principle stipulates that when a company begins using a given inventory valuation method (FIFO, LIFO, or the weighted-average cost method), the company should continue to use that...
Study smarter with the SolutionInn App