Question: PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment, Residual Income [LO 10-4, 10-5] Wescott Company has three divisions: A, B, and
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PA10-3 (Algo) Evaluating Managerial Performance, Proposed Project Impact on Return on Investment, Residual Income [LO 10-4, 10-5] Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Wescott is considering an expansion project in the upcoming year that will cost $67 milion and return $598,000 per year. The project would be implemented by only one of the three divisions: Required: 1. Compute the ROI for each division. 2. Compute the residual income for each division. 3. Rank the divisions according to the ROl and residual income of each. 4-a. Compute the retum on investment on the proposed expansion project. 4-b. is this an acceptable project? 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI 6. Compute the new ROI and residual income for each division if the project was implemented within thot division. Complete this question by entering your answers in the tabs below. Compute the ROl for esch division. Note: Enter your answers as a percentage rounded to two decimal places, (i.e, 0.1234 should be entered as 12.34\%6.) Complete this question by entering your answers in the tabs below. Compute the residual income for each division. Note: Loss amounts should be indicated by a minus sign. Enter your answers in whole dollars not in millions. Rank the divisions according to the ROI and residual income of each. Complete this question by entering your answrers in the tabs below. Compute the return on investment on the proposed expansion project. Note: Enter your answer as a percentage rounded to two decimal places, (h.e, 0.1234 should be entered as 12,3496. Complete this question by entering your answers in the tabs below. Is this an acceptable project? Complete this question by entering your answers in the tabs below. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. Complete this question by entering your answers in the tabs below. Compute the new ROI and residual income for each division if the project was implemented within that division. Note: Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.). Enter your answers in whole dollars not in millions
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