Purchase Solution

Compute ROI

Not what you're looking for?

Ask Custom Question

The Woods and Water Company has two operating divisions, the Service Division and the Irrigation Division. The company evaluates the performance of its division using the return on investment (ROI) measure. The following information pertains to the two divisions as of the end of the current year.

See attachment for table.

During the year, the Service Division repaired 8,000 units at an average service fee of $50.00 per unit. The Irrigation Division sold 250 units at an average price of $5,000. The company requires a minimum rate of return of 12%.

Required:
Compute the Return on Investment (ROI) measure for both divisions an the company as a whole. Based on ROI alone which division had the better performance? Round ROI measures to the nearest whole percent. Evaluate this company.

Attachments
Purchase this Solution

Solution Summary

This solution calculates the revenue, profits, and return on investments (ROI) for the Service Division and Irrigation Division. It also analyses the data and concludes which division is doing better than the other.

Solution Preview

Revenue Service division = 8000*50=400,000
Profits for the service division = 400,000-280,000 = 120,000
ROI for service ...

Purchase this Solution


Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.