Part 1:

The Millard Division's operating data for the past two years are provided below:

	Year 1	Year 2
Return on investment	15%	20%
Net operating income	?	$ 520,000
Turnover	?	2
Margin	?	?
Sales	$ 3,280,000	?

Millard Division's margin in Year 2 was 100% of the margin in Year 1.

The sales for Year 2 were:

Multiple Choice

• $3,900,000

• $3,280,000

• $5,200,000

• $5,533,333

Part 2:

The following information relates to last year's operations at the Legumes Division of Gervani Corporation:

Minimum required rate of return	9%
Return on investment (ROI)	11.6%
Sales	$ 760,000
Turnover (on operating assets)	4 times

What was the Legume Division's net operating income last year?

Multiple Choice

• $88,160

• $68,400

• $19,760

• $22,040

Part 3:

Chavin Company had the following results during August: net operating income, $380,000; turnover, 2; and ROI 15%. Chavin Company's average operating assets were:

Multiple Choice

• $190,000

• $57,000

• $760,000

• $2,533,333

Part 4:

Eddie Corporation is considering the following three investment projects (Ignore income taxes.):

	Project C	Project D	Project E
Investment required	$ 100,800	$ 114,800	$ 238,000
Present value of cash inflows	$ 111,888	$ 133,168	$ 259,420

Rank the projects according to the profitability index, from most profitable to least profitable.

Multiple Choice

• E, C, D

• E, D, C

• D, C, E

• C, E, D

Part 5:

A company with $750,000 in operating assets is considering the purchase of a machine that costs $82,000 and which is expected to reduce operating costs by $28,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)

Multiple Choice

• 2.9 years

• 9.1 years

• 0.34 years

• 26.8 years