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Calculate the companys current return on investment and

Problem

Weski Corporation had net operating income of $300,000 and average operating assets of $1,200,000. The company requires a return on investment of 18%.

Required:

i. Calculate the company's current return on investment and residual income.

ii. The company is investigating an investment of $500,000 in a project that will generate annual net operating income of $105,000. What is the ROI of the project? What is the residual income of the project? Should the company invest in this project?

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Accounting Basics: Calculate the companys current return on investment and

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