Calculating ROI – Use the following information for The Regal Company to compute ROI.

Net operating income ($50,000)

Average operating assets ($230,000)

Sales ($535,000)
Operating expenses($485,000)

Compute Regal's new ROI

1a. Assume that Regal's manager invests in a $30,000 piece of equipment that increases sales by $35,000, while increasing operating expenses by $15,000 and reports the following:

Net operating income ($50,000)

Average operating assets($230,000)

Sales($535,000)
Operating expenses ($485,000)

Compute Regal’s new ROI.

1b. Computing Residual Income - The Retail Division of Zephyr, Inc. has average operating assets of $100,000andisrequiredtoearnareturnof20%ontheseassets. Inthecurrentperiod,thedivision earns $30,000. Compute residual income for the Retail Division.

1c.The Wholesale Division of Zephyr, Inc. has average operating assets of $1,000,000 and is also required to earn a return of 20% on these assets. In the current period, the division earns $220,000. Compute residual income for the Wholesale Division.

1d. Which division is performing better?

Answer rating: 100% (QA)

Regal Company Original ROI ROI Net Operating Income Average Operating Assets 100 ROI 50000 230000 10... View the full answer