Ferrel Wares is a division of a major corporation. The following data are for the latest year of operations:
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Sales
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$10,000,000
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Net operating income
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$950,000
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Average operating assets
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$4,000,000
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The company's minimum required rate of return
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14%
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The manager of Eban Wares has an opportunity to add a project with the following characteristics:
Cost of new equipment: $1,200,000
Additional revenues: $3,000,000
Additional expenses: $2,100,000
Required:
- What is the division's margin (before the new project)?
- What is the division's turnover (before the new project)?
- What is the division's return on investment (ROI) (before the new project)?
- What is the division's residual income (before the new project)?
- What is the division's margin (after the new project is added)?
- What is the division's turnover (after the new project is added)?
- What is the division's return on investment (ROI) ( after the new project is added)?
- What is the division's residual income (after the new project is added)?