This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: B. If I was in Clem Baker’s position, I would accept the new product line because the residual income has increased with the new product line added on, from the most recent year’s income. P10-14A. 1. ROI for the period: .2 = 20% Margin = 800,000/8,000,000 = .1 = Turnover = 8,000,000/4,000,000 = 2 = 2. Margin will remain unchanged, turnover will increase. ROI = .1 x 2.5 = 25% 3. Margin will increase, turnover will remain unchanged. ROI = .106 x 2 = 21.2% 4. Margin will increase, turnover will decrease ROI = .12 x 1.6 = 0.192 = 19.2% 5. Margin will increase, turnover will increase. ROI = .182 x 2.2 = .4 = 40% 6. Margin will decrease, turnover will increase. ROI = 18.4% 7. Margin will stay the same, turnover will decrease. ROI = 19.1%...
View Full Document
- Spring '08
- Marketing, Net Income, Generally Accepted Accounting Principles, Earnings before interest and taxes, new product line, Financial terminology