Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate...
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Accounting
Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.51 percent. Selected operating data for the three divisions follow:
| Peak | View | Grand | ||||
| Sales revenue | $ | 337,000 | $ | 224,000 | $ | 302,000 |
| Cost of goods sold | 197,000 | 105,000 | 182,000 | |||
| Miscellaneous operating expenses | 44,000 | 34,000 | 39,000 | |||
| Average invested assets | 1,210,000 | 910,000 | 1,095,000 | |||
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Required: 1. Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
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2. Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Round your answers to nearest whole dollar.)
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