Essay
Hubbard Division of the Market Company has an opportunity to invest in a new project.The project will yield an incremental operating income of $36,750 on average invested assets of $460,000.Hubbard currently has operating income of $210,000 on average invested assets of $2,050,000.Market Company requires a 6% rate of return on new projects.
a.What is Hubbard's ROI before making an investment in the project?
b.What is Hubbard's residual income before making an investment in the project?
c.What is Hubbard's ROI after making the investment in the project?
d.What is Hubbard's residual income after making the investment in the project?
Correct Answer:
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a.10.24% = $210,000/$2,050,000
b.$87,000...View Answer
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Correct Answer:
Verified
b.$87,000...
View Answer
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