1500 points Exercise 99 Return on Investment ROI and Residua

15.00 points Exercise 9-9 Return on Investment (ROI) and Residual Income Relations LO9-1 A family friend has asked your help in analyzing the operations of three anonymous companies operating i the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Enter your ROI and Rate of Return Percentage answers to the neares percentage (i.e., 0.12 should be entered as 12)) Company $ 310,000 710,000 650,000 S 35,000 Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return $ 157,000 147,000 151% 21% 131% 91% Percentage Dollar amount 49,000 Residual income 7,000 References eBook & Resources Exercise 9-9 Return on investment (ROI and Residual Income Relations [LO9-1, LO9-2 Worksheet Type here to search

Solution

A B C Sales 310000 710000 650000 Net operating income 23550 35000 20230 Average operating assets 157000 166667 147000 Return on Investment 15% 21% 14% Minimum required rate of return: Percentage 13% 29% 9% Dollar amount 20410 49000 13230 Residual income 3140 -14000 7000