eBookCalculator Effect of Proposals on Divisional Performance Acondensed income statement for the Jet Ski Division of AmazingRides Inc. for the year ended December 31, 20Y2, is as follows:Sales $3,720,000 Cost of goods sold (2,666,600) Gross profit $1,053,400 Operating expenses (607,000) Operating income $ 446,400Invested assets $3,100,000 Assume that the Jet Ski Divisionreceived no charges from service departments. The president ofAmazing Rides has indicated that the division’s rate of return on a$3,100,000 investment must be increased to at least 16.8% by theend of the next year if operations are to continue. The divisionmanager is considering the following three proposals: Proposal 1:Transfer equipment with a book value of $620,000 to other divisionsat no gain or loss and lease similar equipment. The annual leasepayments would exceed the amount of depreciation expense on the oldequipment by $111,600. This increase in expense would be includedas part of the cost of goods sold. Sales would remain unchanged.Proposal 2: Purchase new and more efficient machining equipment andthereby reduce the cost of goods sold by $409,200. Sales wouldremain unchanged, and the old equipment, which has no remainingbook value, would be scrapped at no gain or loss. The new equipmentwould increase invested assets by an additional $1,550,000 for theyear. Proposal 3: Reduce invested assets by discontinuing thetandem jet ski line. This action would eliminate sales of $658,800,cost of goods sold of $440,200, and operating expenses of $193,800.Assets of $1,569,500 would be transferred to other divisions at nogain or loss. Required: 1. Using the DuPont formula for return oninvestment, determine the profit margin, investment turnover, andreturn on investment for the Jet Ski Division for the past year.For investment turnover and ROI, round to one decimal place. JetSki Division Profit margin % Investment turnover ROI % Feedback 2.Prepare condensed estimated income statements and compute theinvested assets for each proposal. Amazing Rides Inc.-Jet SkiDivision Estimated Income Statements For the Year Ended December31, 20Y2 Proposal 1 Proposal 2 Proposal 3 Sales $ $ $ Cost of goodssold Gross profit $ $ $ Operating expenses Operating income $ $ $Invested assets $ $ $ Feedback 3. Using the DuPont formula forreturn on investment, determine the profit margin, investmentturnover, and return on investment for each proposal. Round interimcalculations (including previously calculated) and final answer toone decimal place. Profit margin Investment turnover ROI Proposal1: % % Proposal 2: % % Proposal 3: % % 4. Select whether each ofthe three proposals would meet the required 16.8% return oninvestment. Proposal 1: No Proposal 2: Yes Proposal 3: Yes 5. Ifthe Jet Ski Division were in an industry where the profit margincould not be increased, how much would the investment turnover haveto increase to meet the president's required 16.8% return oninvestment? Round intermediate calculations to two decimal placesand your final answer to one decimal place. %