Orange Corp. has two divisions: Fruit and Flower. The followinginformation for the past year is available for each division: FruitDivision Flower Division Sales revenue $ 1,260,000 $ 1,890,000 Costof goods sold and operating expenses 945,000 1,323,000 Netoperating income $ 315,000 $ 567,000 Average invested assets $6,300,000 $ 2,362,500 Orange has established a hurdle rate of 4percent. Required: 1-a. Compute each divisionâs return oninvestment (ROI) and residual income for last year. (Enter your ROIanswers as a percentage rounded to two decimal places, (i.e.,0.1234 should be entered as 12.34%.)) 1-b. Determine which managerseems to be performing better. Fruit Division Flower Division 2.Suppose Orange is investing in new technology that will increaseeach divisionâs operating income by $140,000. The total investmentrequired is $2,000,000, which will be split evenly between the twodivisions. Calculate the ROI and return on investment for eachdivision after the investment is made. (Enter your ROI answers as apercentage rounded to two decimal places, (i.e., 0.1234 should beentered as 12.34%.)) 3. Which manager will accept theinvestment.
Orange Corp. has two divisions: Fruit and Flower. The followinginformation for the past year is available for each division: FruitDivision Flower Division Sales revenue $ 1,260,000 $ 1,890,000 Costof goods sold and operating expenses 945,000 1,323,000 Netoperating income $ 315,000 $ 567,000 Average invested assets $6,300,000 $ 2,362,500 Orange has established a hurdle rate of 4percent. Required: 1-a. Compute each divisionâs return oninvestment (ROI) and residual income for last year. (Enter your ROIanswers as a percentage rounded to two decimal places, (i.e.,0.1234 should be entered as 12.34%.)) 1-b. Determine which managerseems to be performing better. Fruit Division Flower Division 2.Suppose Orange is investing in new technology that will increaseeach divisionâs operating income by $140,000. The total investmentrequired is $2,000,000, which will be split evenly between the twodivisions. Calculate the ROI and return on investment for eachdivision after the investment is made. (Enter your ROI answers as apercentage rounded to two decimal places, (i.e., 0.1234 should beentered as 12.34%.)) 3. Which manager will accept theinvestment.
