Please send answer in chart set up Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).
Please send answer in chart set up
Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).
| Investment Center | Sales | Income | Average Invested Assets |
||||||
| Electronics | $ | 39,840,000 | $ | 2,988,000 | $ | 16,600,000 | |||
| Sporting goods | 25,200,000 | 2,142,000 | 12,600,000 | ||||||
1. Compute
2. Assume a target income level of 11% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?
3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted?
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