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Wescott Company has three divisions: A$,$ B$,$ and C$.$ The company has a hurdle rate of $8$ percent. Selected operating data for the three

divisions are as follows:

Wescott is considering an expansion project in the upcoming year that will cost $$5\mathrm{.}9$ million and return $$543,000$ per year. The project

would be implemented by only one of the three divisions.

Required:

$1.$ Compute the ROI for each division.

$2.$ Compute the residual income for each division.

$3.$ Rank the divisions according to the ROI and residual Income of each.

$4-$a$.$ Compute the return on investment on the proposed expansion project.

$4-$b$.$ Is this an acceptable project?

$5.$ Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI.

$6.$ Compute the new ROI and residual Income for each division if the project was implemented within that division.

Complete this question by entering your answers in the tabs below.

Req $1-$ Compute the ROI for each division.

Note: Enter your answers as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.)$

Req $2-$ Compute the residual income for each division.

Note: Loss amounts should be indicated by a minus sign. Enter your answers in whole dollars not in millions.

Req $3-$ Rank the divisions according to the ROI and residual income of each.

Complete this question by entering your answers in the tabs below.

Req$4A-$ Compute the return on investment on the proposed expansion project.

Note: Enter your answer as a percentage rounded to two decimal places, $($i$.$e$.,0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.)$

Req$4$B$-$ Complete this question by entering your answers in the tabs below.

Is this an acceptable project?

Req $5-$ Complete this question by entering your answers in the tabs below.

Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI.

Req $6-$ Compute the new ROI and residual income for each division if the project was implemented within that division.

Note: Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to $2$ decimal places, $($i$.$e$.,$

$0\mathrm{.}1234$ should be entered as $12\mathrm{.}34\%.).$ Enter your answers in whole dollars not in millions.

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