Jasper Corporation is organized in three separate divisions. The three divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the overall company produced a 12% return on its investment. Managers of Jasper's Carbon Division recently studied an investment opportunity that would assist in the division's future growth. Relevant data follow. Carbon Division Investment Opportunity P12,800,000 P 4,200,000 Operating income Invested capital 80,000,000 30,000,000
Q: Far Sight is a division of a major corporation. The following data are for the latest year of…
A: a. Return On Investment = Net Operating IncomeAverage Operating Assets =$1,738,080$6,000,000=28.97%
Q: The New York division of Ram Co. had the following financial data for 2020: sales $600,000, average…
A: Return on investment means how much net income has been earned on average investment amount.…
Q: GGX is the general manager of the Jung Division, and his performance is measured using the residual…
A: Residual income is the excess of the amount of the return on Investment (ROI) over a target amount…
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Eacher Wares is a division of a major corporation. The following data are for the latest year of…
A: Hi student Since there are multiple subparts, we will answer only first three subparts. If you want…
Q: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following…
A: Residual income means the income that one might continue to receive even after completion of the…
Q: Paula Boothe, president of the Monty Corporation, has mandated a minimum 6% return on investment for…
A: Residual income = Operating income - (Investment*Minimum rate of return)
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Net Present value = Present value of cash inflows - Present value of cash outflows Payback Period…
Q: Ceder Products is a division of a major corporation. Last year the division had total sales of…
A: Margin = Net operating income / Total sales
Q: Jasper Corporation is organized in three separate divisions. The three divisional managers are…
A: Under the residual income approach, if the residual income after undertaking the new opportunity is…
Q: Division A and Division B are divisions within the same company. The managers of both divisions are…
A: Dear student, since you have asked multiple subpart we will answer only first 3 question as per…
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A:
Q: Hope and Co. is a multi-divisional marketing firm. The performance of divisions is evaluated using…
A: Return On Investment (ROI) is a financial metrics which is used to determine the performance of…
Q: Jacob Products is a division of a major corporation. Last year the division had total sales of…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Required: 1. Calculate the payback period for each product. 2. Calculate the net present value…
A: Pay Back period is calculated by the Business Entities to know that in how many years their…
Q: Coolbrook Company has the following information available for the past year: River Division…
A: Since the student has posted multiple questions, only the first two are answerable. Thank You.
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: “As the question has more than 3 sub-parts, the first 3 subparts are answered. If you want the…
Q: X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent…
A: >Return on Investment or ROI is the rate of return earned on given average invested assets.…
Q: Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's…
A: Since we answer only three subparts, we will answer the first three subparts. Please resubmit the…
Q: Paula Boothe, president of the Indigo Corporation, has mandated a minimum 8% return on investment…
A: Return on Investment = Operating income/Investment
Q: Division A of Muscat Company had the following results for the year just ended: Sales $480,000…
A: Compute the effect on Division A’s ROI if it introduces the new product line. Step 1: Determine the…
Q: Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear…
A: Requirement 1: Compute the investment turnover.
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: PI stands for Profitability index which states the relationship among the costs as well as the…
Q: Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisIOn Invest…
A: Residual income = Divisional income / Divisional investment
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Net present value method: Net present value method is the method which is used to compare the…
Q: The following information is available about the status and operations of VTS Company, which has a…
A: Division B present situation Asset Turnover =…
Q: elected sales and operating data for three divisions of different structural engineering firms are…
A: Solution : Return on investment is percentage return earned on average operating assets of the…
Q: Jasper Corporation is organized in three separate divisions. The three divisional managers are…
A: Return on investment: A realized gain on the investment is called return on investment. If their a…
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Internal rate of return : It is the return that the project is estimated to generate to cover its…
Q: Stuart Technologies, Inc. has three divisions. Stuart has a desired rate of return of 11.0 percent.…
A: Hi student Since there are multiple subparts, we will answer only first three subparts. If you want…
Q: Agustin Industries is a division of a major corporation. Data concerning the most recent year…
A: Return on investment = Net operating income / Average operating assets
Q: Betsy Union is the Pika Division manager and her performance is evaluated by executive management…
A: Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in…
Q: Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear…
A: Preparation of divisional income statement for the Men’s Wear: Fashion Forward Inc.…
Q: Davis Company has established a target rate of return of 15% for all divisions. For the most recent…
A: Residual income= Operating income- Minimum required return Operating income= Sales- expenses =…
Q: Cabell Products is a division of a major corporation. Last year the division had total sales of…
A: Formula: Margin = ( Net operating income / Sales ) x 100
Q: Jacob Products is a division of a major corporation. Last year the division had total sales of…
A: Residual income is the excess net income over the minimum required rate of return The minimum…
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Creative Business Solutions (CBS), a division of Doug Jorgenson CPA, buys and installs modular…
A: WORKING : 1. SEGMENT MARGIN FOR CBS : PARTICULARS AMOUNT $ SALES $9,000,000 VARIABLE…
Q: X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent…
A: Economic value added (EVA): Economic value added indicates the profitability of the projects that…
Q: The following information is available about the status and operations of Jay Arr Company, which has…
A: Given, ROI = 15% Discount rate = 12%
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: As you have posted multiple sub-parts and have not mentioned which are to be answered, I am…
Q: Calculate the payback period for each product. 2. Calculate the net present value for each product.…
A: Payback Period: It refers to the period in which an investment or a project recovers its initial…
Q: 1. Compute X Solutions Residual Income, was the performance of the division acceptable?
A: A Residual income is an income that a person continues to earn after completing a production…
Q: What was the Paper Division's net operating income last year? The following information relates to…
A: Net operating income(NOI) =Return on investment (ROI) × Assets Minimum required rate of return:…
Q: Finley is the Manager of the "Funky" division at ABC, Inc. Finley's bonus increases as Funky's ROI…
A: Return on investment is the output which the entity or individual expects or receives by investing…
Q: Selected sales and operating data for three divisions of different structural engineering firms are…
A: Return on investment is a profitability measure that determines how well an investment performed. It…
Q: Alpha Corporation recorded operating data for its Omega division for the year. Alpha requires its…
A:
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Workings:
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Solution 1: Computation of Annual cash inflows Particulars Product A…
- What is the likely reaction of Jasper's corporate management toward the investment? Why?
Step by step
Solved in 2 steps
- Required information Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Sales revenue Income Division A ? Division B Division C $ 11,000,000 ? $ 530,000 $ 2,130,000 ? Average investment ? $ 2,500,000 ? Sales margin 30% ? 35% Capital turnover 2 ? ? ROI Residual income ? ? ? 40% ? $ 139,000 Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 10 percent. Note: Round "Capital turnover" answers to 2 decimal places. Division A Division B Division C Sales revenue $ 40,100,000 Income $ 1,650,000 $ 8,822,000 Average investment $ 10,025,000 Sales margin 22 % % 25 % Capital turnover ROI Residual income 1.00 200 % % $ 69 22 % 450,000ROI and Residual Income; Investment Evaluation Income: $150,000 Current residual income of the Northeast Division: $148,000 Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company produced a 13 percent return on its investment. During the past week, management of the company’s Northeast Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the Northeast Division and the competitor Northeast Division Competitor Sales ....................................................................................................... $8,400,000 $5,200,000 Variable costs…Required information Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Division A ? $ 580,000 7 20% $ Division A 1,770,000 Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Note: Round "Capital turnover" answers to 2 decimal places. 20 % 1.00 % Division B $ 11,000,000 $ 2,040,000 $ 2,630,000 $ $ $ Division B 41,700,000 8,340,000 10,425,000 % ? % Division C $ 7 25% ? 30% $ 132,000 Division C 25 % 20% 516,000
- ROI and Residual Income; Investment Evaluation Income: $150,000 Current residual income of the Northeast Division: $148,000 Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company produced a 13 percent return on its investment. During the past week, management of the company’s Northeast Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities. (If the competitor is acquired, it will be acquired at its book value.) The data that follow relate to recent performance of the Northeast Division and the competitor Northeast Division Competitor Sales ....................................................................................................... $8,400,000 $5,200,000 Variable costs…! Required information Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Division A ? $ 560,000 Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Division A $ 8,750,000 $ 1,750,000 $ 8,750,000 20 % 1.00 20 % ? 30% 2 ? ? $ 1,050,000 Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Note: Round "Capital turnover" answers to 2 decimal places. Division B $ 11,000,000 $ 2,020,000 $ 2,610,000 $ $ $ Division B 41,000,000 9,020,000 10,250,000 22 % ? ? ? ? % Check my work $ Division C ? ? ? 35% ? 20% $ 129,000 Division C 25 % 20 % 492,000Chick-Fil-A are the Lord’s Calories (CLC) has the following divisions within their company that achieved the reported ROIs for the previous year: Division ROI A 15% B 20% C 18% CLC has been approached with a $350,000 investment opportunity. Which division will AFA choose to invest in, and how much operating income will be generated from the investment? A. AFA will invest in Division A; the investment will earn operating income of $52,000 B. AFA will invest in Division C; the investment will earn operating income of $63,000 C. AFA will invest in Division B; the investment will earn operating income of $70,000 D. AFA will invest in Division A; the investment will earn operating income of $63,000
- The Electronics Division of Anton Company reports the following results for the current year: Revenues Operating expenses Operating income Operating assets Multiple Choice Anton Company has set a target return on investment (ROI) of 12% for the Electronics Division. The Electronic Division's return on investment is: O 11.36%. $490,000 $440,000 8.33%. $ 50,000 $600,000I'm About to Fall Asleep (AFA) has the following divisions within their company, that achieved the reported ROI's for the previous year. Division ROI A 20% B 18% C 15% AFA has been approached with a $350,000 investment opportunity. Which division will AFA choose to invest in, and how much operating income will be generated from the investment. A. AFA will invest in Division B, the investment will earn operating income of $63,000 B. AFA will invest in Division A; the investment will earn operating income of $70,000 C. AFA will invest in Division C; the investment will earn operating income of $52,500. D. AFA will invest in Division C, the investment will earn operating income of $63,000Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-31 Economic Value Added Refer to the information for Washington Company above. Required: 1. Calculate the EVA for the Adams Division. 2. Calculate the EVA for the Jefferson Division. 3. CONCEPTUAL CONNECTION Is each division creating or destroying wealth? 4. CONCEPTUAL CONNECTION Describe generally the types of actions that Washingtons management team could take to increase Jefferson Divisions EVA?
- Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant, and Specialty. Each division is evaluated as a profit center. Data for each division for last year are as follows (numbers in thousands): The income tax rate for Xenold, Inc., is 40 percent. Xenold, Inc., has two sources of financing: bonds paying 5 percent interest, which account for 25 percent of total investment, and equity accounting for the remaining 75 percent of total investment. Xenold, Inc., has been in business for over 15 years and is considered a relatively stable stock, despite its link to the cyclical construction industry. As a result, Xenold stock has an opportunity cost of 5 percent over the 4 percent long-term government bond rate. Xenolds total capital employed is 5.04 million (2,600,000 for the Home Division, 1,700,000 for the Restaurant Division, and the remainder for the Specialty Division). Required: 1. Prepare a segmented income statement for Xenold, Inc., for last year. 2. Calculate Xenolds weighted average cost of capital. (Round to four significant digits.) 3. Calculate EVA for each division and for Xenold, Inc. 4. Comment on the performance of each of the divisions.Sunland Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Sunland Corporation requires a 10% minimum return on investment. The following information is available for the year just ended. Divisional Divisional Operating Invested Division Operating Assets Income Capital Ashton $870,000 $93,090 $197,000 Drye 790,000 88,480 67,000 Poole 485,000 57,230 117,000Evaluating Investment Centers Terry Enterprises, Inc. has two divisions-the Foods division and the Clothes division. Historically, Terry has used the division's ROI as the performance measure for the bonus determinations. Terry Foods division has gross total assets of $1,000,000, accumulated depreciation of $350,000, current liabilities of $250,000, and sales of $2,000,000. Foods' operating income is $320,000. Terry Clothes division has gross total assets of $5,000,000, accumulated depreciation of $2,100,000, current liabilities of $1,500,000, and sales of $8,000,000. Clothes' operating income is $870,000. Use the DuPont formula to compute ROI for each division and for Terry Enterprises as a whole. Use operating income and gross total assets as the measures of income and investment. Round answers to the nearest whole percentage. ROI Foods Clothes Terry Enterprises % % %