Problem H For the year ended 2009 December 31, Fore Company reported the following information for the company as a whole and for the sports segment of Fore Corporation: Sports Segment Fore company Woods Project Irons Project Total Sales $ 12,000,000 $ 1,350,000 $ 600,000 $ 1,950,000 Income 1,125,000 300,000 37,500 337,500 Investment 4,500,000 900,000 105,000 1,005,000 Fore Company anticipates that these relationships (return on investment, margin, and turnover) will hold true for the upcoming year. The sports segment is faced with the possibility of adding a new project in 2010, with the following projected data: Putters Project Sales $ 450,000 Income 52,500 Investment 187,500 Determine the return on investment for Fore Company, for the sports segment, and for the Woods and Irons projects separately for the year ended 2009 December 31. Using this information, determine the effect of adding the Putters project on the sports segment's return on investment. What problem may be encountered? Using the data provided in the previous problem, determine the residual income (1) for all three projects and (2) for the sports segment with and without the Putters project, if the cost of capital is 25 per cent. What is the effect on the sport segment's residual income if the Putter project is added? How does this result compare with your answer to the previous problem? Problem H For the year ended 2009 December 31, Fore Company reported the following information for the company as a whole and for the sports segment of Fore Corporation: Sports Segment Fore company Woods Project Irons Project Total Sales $ 12,000,000 $ 1,350,000 $ 600,000 $ 1,950,000 Income 1,125,000 300,000 37,500 337,500 Investment 4,500,000 900,000 105,000 1,005,000 Fore Company anticipates that these relationships (return on investment, margin, and turnover) will hold true for the upcoming year. The sports segment is faced with the possibility of adding a new project in 2010, with the following projected data: Putters Project Sales $ 450,000 Income 52,500 Investment 187,500 Determine the return on investment for Fore Company, for the sports segment, and for the Woods and Irons projects separately for the year ended 2009 December 31. Using this information, determine the effect of adding the Putters project on the sports segment's return on investment. What problem may be encountered? Using the data provided in the previous problem, determine the residual income (1) for all three projects and (2) for the sports segment with and without the Putters project, if the cost of capital is 25 per cent. What is the effect on the sport segment's residual income if the Putter project is added? How does this result compare with your answer to the previous problem
Problem H For the year ended 2009 December 31, Fore Company reported the following information for the company as a whole and for the sports segment of Fore Corporation:
Sports Segment
Fore company
Woods Project
Irons Project
Total
Sales $ 12,000,000 $ 1,350,000 $ 600,000 $ 1,950,000
Income 1,125,000 300,000 37,500 337,500
Investment 4,500,000 900,000 105,000 1,005,000
Fore Company anticipates that these relationships (
Putters Project
Sales
$ 450,000
Income
52,500
Investment
187,500
Determine the return on investment for Fore Company, for the sports segment, and for the Woods and Irons projects separately for the year ended 2009 December 31.
Using this information, determine the effect of adding the Putters project on the sports segment's return on investment. What problem may be encountered?
Using the data provided in the previous problem, determine the residual income (1) for all three projects and (2) for the sports segment with and without the Putters project, if the cost of capital is 25 per cent. What is the effect on the sport segment's residual income if the Putter project is added? How does this result compare with your answer to the previous problem?
Problem H For the year ended 2009 December 31, Fore Company reported the following information for the company as a whole and for the sports segment of Fore Corporation:
Sports Segment
Fore company
Woods Project
Irons Project
Total
Sales $ 12,000,000 $ 1,350,000 $ 600,000 $ 1,950,000
Income 1,125,000 300,000 37,500 337,500
Investment 4,500,000 900,000 105,000 1,005,000
Fore Company anticipates that these relationships (return on investment, margin, and turnover) will hold true for the upcoming year. The sports segment is faced with the possibility of adding a new project in 2010, with the following projected data:
Putters Project
Sales
$ 450,000
Income
52,500
Investment
187,500
Determine the return on investment for Fore Company, for the sports segment, and for the Woods and Irons projects separately for the year ended 2009 December 31.
Using this information, determine the effect of adding the Putters project on the sports segment's return on investment. What problem may be encountered?
Using the data provided in the previous problem, determine the residual income (1) for all three projects and (2) for the sports segment with and without the Putters project, if the cost of capital is 25 per cent. What is the effect on the sport segment's residual income if the Putter project is added? How does this result compare with your answer to the previous problem
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