50.1K

Verified Solution

Link Copied!

Sezer Technologies, Inc. (STI), has three divisions. STI has a desired rate of return of 12.5 percent. The operating assets and income for each division are as follows:

Divisions	Operating Assets			Operating Income
Printer	$	270,000		$	48,000
Copier		405,000			45,000
Fax		180,000			27,000
Total	$	855,000		$	120,000

STI headquarters has $60,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs:

	Expected ROIs for
Divisions	Additional Investments
Printer	14.0	%
Copier	13.0	%
Fax	12.0	%

Required:

a-1.	Calculate the ROI for each division. (Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)

a-2.	Which division manager is currently producing the highest ROI?
	Fax division Printer division Copier division

b.	Based on ROI, which division manager would be most eager to accept the $60,000 of investment funds?
	Printer division Copier division Fax division

c.	Based on ROI, which division manager would be least likely to accept the $60,000 of investment funds?
	Fax division Printer division Copier division

d.	Which division offers the best investment opportunity for STI?
	Copier division Printer division Fax division

g.	Calculate the residual income:

(1)	At the corporate (headquarters) level before the additional investment.

(2)	At the division level before the additional investment. (Loss amounts should be indicated by a minus sign.)

(3)	At the investment level. (Loss amounts should be indicated by a minus sign.)

(4)	At the divsion level after the additional investment. (Loss amounts should be indicated by a minus sign.)

I NEED G ANSWERED AND EVERYTHING BELOW G

Answer & Explanation Solved by verified expert

See Answer