The following 2010 information is available for Cornwall Industries: average assets invested $7,200,000; revenues, $26,400,000; and expenses,

Question:

The following 2010 information is available for Cornwall Industries: average assets invested $7,200,000; revenues, $26,400,000; and expenses, $24,600,000.

a. Calculate return on investment.

b. Calculate profit margin.

c. Calculate asset turnover.

d. Using (b) and (c), prove your answer to (a).

e. Assuming Cornwall's cost of capital is 14 percent, compute the 2010 residual income.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...