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chapter%20123 - Accounting 2102 Farmer Chapter 12 Practice...

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Unformatted text preview: Accounting 2102 Farmer Chapter 12 Practice Madam Medusa’s Pawn Shop/Boutique, Inc. Brutus is a division of Madam Medusa’s Pawn Shop/Boutique, Inc. The following data are for the latest year of operations: Sales................................................................................ $10,890,000 Net operating income...................................................... $609,840 Average operating assets ................................................ $3,000,000 The company’s minimum required rate of return ........... 16% a. What is the division's sales margin? b. What is the division's investment turnover? c. What is the division's return on investment (ROI)? d. What is the division's residual income? e. Assume the division’s manager is presented with an investment opportunity that will yield an ROI of 18%. If the manager’s performance is evaluated based on the division’s ROI, will the investment opportunity be accepted or rejected? Is the manager’s decision in the best interest of the company? Explain....
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This note was uploaded on 09/07/2011 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at UGA.

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chapter%20123 - Accounting 2102 Farmer Chapter 12 Practice...

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