1.Juniper Design, provides design services to residential developers. Last year, the company had net operating income of $450,000 on sales of $1,600,000. The company’s average operating assets were $1,800,000 and its minimum required rate of return was 15%.
Required:
Compute the company’s residual income.
2. Provide the missing data in the following table for a distributor of martial arts products:
Note: Enter “Turnover” and “ROI” answers to 1 decimal place.
3. Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
| Division | ||
|---|---|---|
| Osaka | Yokohama | |
| Sales | $ 10,400,000 | $ 34,000,000 |
| Net operating income | $ 520,000 | $ 2,380,000 |
| Average operating assets | $ 2,600,000 | $ 17,000,000 |
Required:
Compute the residual income for each division assuming the company’s minimum required rate of return is 12%.
For each division, compute the return on investment (ROI).
