Imelda corporation is considering an investment opportunity. The following information was provided on several investment portfolio opportunity based on their past performance. Project Air 185,400 80,066 326,800 Project Marine Sales (RM) Contribution margin (RM) Operating assets (RM) Minimum required rate of return (%) Project Hill 220,400 142,076 645,800 125,400 63,200 252,800 10 12 15 The fixed expenses recorded on each project is equivalent to 10% on the value of their operating assets. Required: (a) Calculate the Return on Investment (ROI) for each of the portfolio. (b) Based on the required rate of return, determine the Residual Income (RI) for each of the portfolio.

Imelda corporation is considering an investment opportunity. The following information was provided on several investment portfolio opportunity based on their past performance. Project Air 185,400 80,066 326,800 Project Marine Sales (RM) Contribution margin (RM) Operating assets (RM) Minimum required rate of return (%) Project Hill 220,400 142,076 645,800 125,400 63,200 252,800 10 12 15 The fixed expenses recorded on each project is equivalent to 10% on the value of their operating assets. Required: (a) Calculate the Return on Investment (ROI) for each of the portfolio. (b) Based on the required rate of return, determine the Residual Income (RI) for each of the portfolio.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3PA

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