Boomerang Products Has Three Divisions,which Operate Autonomously The Company's Desired Rate of Return Is 25

question 108

Essay

Boomerang Products has three divisions,which operate autonomously.Their results for 2017 were as follows:
$$\begin{array} { | l | r | r | r | } \hline & { \text { Standard } } & { \text { Deluxe } } & { \text { Supreme } } \\\hline \text { Sales } & \$ 30000000 & \$ 40000000 & \$ 50000000 \\\hline \text { Cost of goods sold } & 15000000 & 25000000 & 37000000 \\\hline \text { Operating profit } & 4500000 & 4750000 & 5000000 \\\hline \text { Investment base } & 18000000 & 18555000 & 18650000 \\\hline\end{array}$$
The company's desired rate of return is 25%.
Required:
a.Calculate each division's ROI (round to three decimal places).
b.Calculate each division's residual income.
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