Question

Ivy Corp. has the following operating data for the past 2 years: Year 1 Year 2...

Ivy Corp. has the following operating data for the past 2 years:

Year 1 Year 2

Return on Investment

10%

40%

Residual Income

$600 ?

Required Rate of return

8% 10%

Average operating assets

? $42,000

Sales in year 2 is $60,000 more than sales in year 1.

The Company had the same capital turnover in both years.

(Q): What is the sales margin in Year 2? Use two decimal places in the answer (for example, if the answer is 21%, key in "0.21").

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Answer #1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

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