Homework: HW #8 - Chapter 10 Score: 0.67 of 1 pt %E10-23A (similar to) Question Help...

 

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Homework: HW #8 - Chapter 10 Score: 0.67 of 1 pt %E10-23A (similar to) Question Help Stenback Ceramics, a division of Sesnie Corporation, has an operating income of $78,000 and total assets of $416,000. The required rate of return for the company is 11%. The company is evaluating whether it should use retum on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Stenback Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investment would earn $15,600 for the company. - X Read the requirements, it this investment opportunity were undertaken, the ROI Would De 15 %. 10 % If the manager of this division is evaluated based on ROI she would not want to make this investment. Inve Requirement 3. What is the ROI of the investment opportunity? Would the investment be desirable from the The ROI of the investment opportunity is X Target rate of return Enter any number in the edit fields and then click Check Answer. 7 of 9 (7 complete) ▼ ▶ } = RI Requirements From the standpoint of Sesnie Corporation this investment is desirable. The ROI of the investment opp Requirement 4. What would the residual income (RI) be for Stenback Ceramics if this investment opportunity were evaluated based on RI? Why or why not? First determine the formula to calculate the RI. Operating income 1 Total assets (Use parentheses or a minus sign for a negative RI.) The residual income (RI) for Stenback Ceramics if this investment opportunity were to be undertaken is S If the manager of this division is evaluated based on RI she would want to make this investment. The Requirement 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? (Use parentheses or a minus sign for a negative RI.) The RI of the investment opportunity is $ What is the original return on investment (ROI) for Stenback Ceramics (before making any additional investment)? 2. What would the ROI be for Stenback Ceramics if this investment opportunity were undertaken? Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? HW Score: 66.67%, 6.67 of 10 pts 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? 4. What would the residual income (RI) be for Stenback Ceramics if this investment opportunity were to be undertaken? Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable the standpoint of Sesnie Corporation? Why or why not? 6. Which performance measurement method, ROI or RI, promotes goal congruence? Why? Print Done Save she ? Homework: HW #8 - Chapter 10 Score: 0.67 of 1 pt %E10-23A (similar to) Question Help Stenback Ceramics, a division of Sesnie Corporation, has an operating income of $78,000 and total assets of $416,000. The required rate of return for the company is 11%. The company is evaluating whether it should use retum on investment (ROI) or residual income (RI) as a measurement of performance for its division managers. The manager of Stenback Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investment would earn $15,600 for the company. - X Read the requirements, it this investment opportunity were undertaken, the ROI Would De 15 %. 10 % If the manager of this division is evaluated based on ROI she would not want to make this investment. Inve Requirement 3. What is the ROI of the investment opportunity? Would the investment be desirable from the The ROI of the investment opportunity is X Target rate of return Enter any number in the edit fields and then click Check Answer. 7 of 9 (7 complete) ▼ ▶ } = RI Requirements From the standpoint of Sesnie Corporation this investment is desirable. The ROI of the investment opp Requirement 4. What would the residual income (RI) be for Stenback Ceramics if this investment opportunity were evaluated based on RI? Why or why not? First determine the formula to calculate the RI. Operating income 1 Total assets (Use parentheses or a minus sign for a negative RI.) The residual income (RI) for Stenback Ceramics if this investment opportunity were to be undertaken is S If the manager of this division is evaluated based on RI she would want to make this investment. The Requirement 5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? (Use parentheses or a minus sign for a negative RI.) The RI of the investment opportunity is $ What is the original return on investment (ROI) for Stenback Ceramics (before making any additional investment)? 2. What would the ROI be for Stenback Ceramics if this investment opportunity were undertaken? Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not? HW Score: 66.67%, 6.67 of 10 pts 3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Sesnie Corporation? Why or why not? 4. What would the residual income (RI) be for Stenback Ceramics if this investment opportunity were to be undertaken? Would the manager of the Stenback Ceramics division want to make this investment if she were evaluated based on RI? Why or why not? 5. What is the RI of the investment opportunity? Would the investment be desirable the standpoint of Sesnie Corporation? Why or why not? 6. Which performance measurement method, ROI or RI, promotes goal congruence? Why? Print Done Save she ?

Answer rating: 100% (QA)

1 Net Operating Income a 78000 Total Assets b 416000 ROI ab1875 2 Net Operating Income a Existing Ne... View the full answer