Question: Isabelle Abiassi operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue $8,100,000 Operating income $716,250

Isabelle Abiassi operates a popular summer camp for elementary school children. Projections for the current year are as follows: Sales revenue $8,100,000 Operating income $716,250 Average assets $4,080,000 The camps weighted-average cost of capital is 10%, and Isabelle requires that all new investments generate a return on investment of at least 15%. The camps current tax rate is 25%. At last weeks advisory board meeting, Isabelle told the board that she had up to $50,000 to invest in new facilities at the camp and asked them to recommend some projects. Today the boards president presented Isabelle with the following list of three potential investments to improve the camp facilities. Playground Swimming Pool Gym Incremental operating income $ 3,990 $ 5,200 $ 2,550 Average total assets 26,600 40,000 15,000 Calculate the return on investment, residual income, and economic value added for each of the three projects. (Enter negative amounts using either a negative sign preceding the number, e.g. -45 or parentheses, e.g. (45). Round Economic Value Added answer to 2 decimal places, e.g. 15.25 & all other answers to 0 decimal places, e.g. 15 or 15%.) Playground Pool Gym Return on Investment Enter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal places % Enter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal places % Enter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal placesEnter percentages rounded to 0 decimal places % Residual Income $Enter a dollar amount rounded to 0 decimal places Enter a dollar amount rounded to 0 decimal placesEnter a dollar amount rounded to 0 decimal places $Enter a dollar amount rounded to 0 decimal places Enter a dollar amount rounded to 0 decimal placesEnter a dollar amount rounded to 0 decimal places $Enter a dollar amount rounded to 0 decimal places Enter a dollar amount rounded to 0 decimal placesEnter a dollar amount rounded to 0 decimal places Economic Value Added $Enter a dollar amount rounded to 2 decimal places Enter a dollar amount rounded to 2 decimal placesEnter a dollar amount rounded to 2 decimal places $Enter a dollar amount rounded to 2 decimal places Enter a dollar amount rounded to 2 decimal placesEnter a dollar amount rounded to 2 decimal places $Enter a dollar amount rounded to 2 decimal places Enter a dollar amount rounded to 2 decimal placesEnter a dollar amount rounded to 2 decimal places eTextbook and Media Which of the three projects do you recommend Isabelle undertake? select a projectselect a projectselect a project

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