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Wescott Company has three divisions: A, B, and C. The company has a hurdle rate...

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Accounting

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:
Division A Division B Division C
Sales revenue $ 1,245,000 $ 1,148,000 $ 1,162,000
Cost of goods sold 769,000843,000844,000
Miscellaneous operating expenses 76,00064,00065,000
Interest and taxes 60,00053,00053,000
Average invested assets 10,376,0002,494,0004,101,000
Wescott is considering an expansion project in the upcoming year that will cost $6.9 million and return $576,000 per year. The project would be implemented by only one of the three divisions. 6. Compute the new ROI and residual income for each division if the project was implemented within that division.

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