Question

The following information pertains to a segment of the Marian Company. Invested capital is defined as...

The following information pertains to a segment of the Marian Company. Invested capital is defined as total assets. The weighted average cost of capital is 10%. The ROI of the segment before the project is 20%. The ROI of the segment after the project is 18%. The manager is evaluated based on the segment's economic profit. A project earning a ROI of 12% should be ________.

1. accepted

2. rejected

3. compared to the company's ROI

4. compared to the company's residual income

Homework Answers

Answer #1

1. Accepted

As there is 2% profit (i.e. 12%-10%) additional via this project. So if more capital is invested in this segment for this new project than 2% will be the Return of new capital.

Hope this makes contribution to your success. Hit Like to motivates the experts to provide quality solutions.

Any feedback will also be appreciated.

Best of luck?!  

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The following information pertains to Bishop Concrete:   Sales revenue $1,850,000   Gross margin 670,000   Income 97,000   Invested...
The following information pertains to Bishop Concrete:   Sales revenue $1,850,000   Gross margin 670,000   Income 97,000   Invested capital 520,000    The company's imputed interest rate is 10%. 1.) The capital turnover is: 3.56. 28.11. 19.07. 18.65. 5.36. 2.) The sales margin is: 14.48%. 5.24%. 36.22%. 18.65%. 28.11%. 3.) The ROI is: 18.65%. 5.24%. 28.11%. 36.22%. 14.48%. 4.) The residual income is: $87,300. $45,000. $30,000. $52,000. $88,000.
. Performance Evaluation Methods Ebel Wares is a division of a major corporation. The following data...
. Performance Evaluation Methods Ebel Wares is a division of a major corporation. The following data are for the latest year of operations:     Sales................................................................................ $29,120,000 Net operating income..................................................... $1,514,240 Average operating assets................................................ $8,000,000 The company’s minimum required rate of return.......... 18%             Required:         a.       What is the division's margin? b.      What is the division's turnover? c.       What is the division's return on investment (ROI)? d.      What is the division's residual income? C. Performance Evaluation Methods The Clipper Corporation had net operating income of $380,000...
The company has two parts, General and advance, both are investment centers. The following information was...
The company has two parts, General and advance, both are investment centers. The following information was collected from their ’ 2020 financial statements: General Advance Net operating income (in $ thousands) 18000 8000 Sales (in $ thousands) 180000 88000 End of year operating assets (in $ thousands) 70000 33000 Variable cost (as a fraction of total costs) 0.49 0.49 Average selling price per unit 13.26 15.21 Assume end of year, rather than average, assets are used in all relevant calculations....
1.  Which of the following is not a consideration in segment reporting for diversified companies? a. Consolidation...
1.  Which of the following is not a consideration in segment reporting for diversified companies? a. Consolidation policy. b. Defining the segments. c. Transfer pricing. d. Allocation of joint costs. 2.  Cream Company operates in three different industries, each of which is appropriately regarded as a reportable segment. Segment No. 1 contributed 60% of Cream Company's total sales. Sales for Segment No. 1 were $450,000 and traceable costs were $200,000. Total common costs for Cream were $300,000. Cream allocates common costs on...
ROI, Residual Income, Behavioral Issues Jump Start Company (JSC), a subsidiary of Mason Industries, manufactures go-carts...
ROI, Residual Income, Behavioral Issues Jump Start Company (JSC), a subsidiary of Mason Industries, manufactures go-carts and other recreational vehicles. Family recreational centers that feature go-cart tracks along with miniature golf, batting cages, and arcade games have increased in popularity. As a result, JSC has been pressured by Mason management to diversify into some of these other recreational areas. Recreational Leasing, Inc. (RLI), one of the largest firms leasing arcade games to these family recreational centers, is looking for a...
Please ANSWER 5-8 Capital Rationing Decision for a Service Company Involving Four Proposals Renaissance Capital Group...
Please ANSWER 5-8 Capital Rationing Decision for a Service Company Involving Four Proposals Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows: Investment Year Income from Operations Net Cash Flow Proposal A: $680,000 1 $64,000 $200,000 2    64,000   200,000 3    64,000   200,000 4    24,000   160,000 5    24,000    160,000 $240,000 $920,000 Proposal B: $320,000 1...
Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals....
Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated operating income, and net cash flow for each proposal are as follows: Investment Year Operating Income Net Cash Flow Proposal A: $680,000 1 $ 64,000 $ 200,000 2    64,000    200,000 3    64,000    200,000 4    24,000    160,000 5    24,000    160,000 $240,000 $ 920,000 Proposal B: $320,000 1 $ 26,000 $ 90,000 2    26,000     90,000 3      6,000     70,000 4      6,000...
"Risk' can be best defined as on the of the followings:   a. Variability of returns and...
"Risk' can be best defined as on the of the followings:   a. Variability of returns and probability of financial loss b. Chance of financial loss   c. Variability of returns   d. Correlation of relationship among two variables Which of the following statement is NOT TRUE when we argue that the idea of riskless arbitrage is to accumulate the portfolio with following conditions : a. Requires no net wealth invested initially   b. Invest in the long-term securities only where risk will be...
The following statement is true is all respects: Organizations that make up the supply chain are...
The following statement is true is all respects: Organizations that make up the supply chain are “linked” together through physical, financial and information flows forming partnerships that add value to the customer experience. True False Flag this Question Question 3 1 pts Supply chain management is undergoing a level of transformation, not unlike other disciplines. Which of the selections below best represents this transformation. Business Logistics Physical Distribution Integrated Business Planning Its not transforming Flag this Question Question 4 1...
CASE STUDY – Jacobson Carpet Company In January 2002, Ms. Mary Lewis was preparing to meet...
CASE STUDY – Jacobson Carpet Company In January 2002, Ms. Mary Lewis was preparing to meet with Mr. Carpenter, President of Jacobson Carpet Company. Ms. Lewis assumed that the meeting was related to the recent Board of directors of the company. As a direct assistant to the President, she knew from experience that this type of meeting often resulted in a project to be studied. Her expectation was confirmed as soon as Mr. Carpenter began to inform her of the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT