Essay
TotToys Ltd. recently made £2,000,000 of capital available to its Toddler Division. The manager of the Toddler Division is evaluating the possibility of investing the additional funds in two new toys. Information about the two new toys is as follows:
Any funds not invested in a project will be invested to earn the company's required minimum return of 10 percent. Without the additional investment, the Toddler Division's average operating assets would have been £10,000,000, and its operating income would have been £1,400,000.
Required:
a.
Compute the Toddler Division's operating income and ROI, assuming that the division manager rejects both projects.
b.
Compute the Toddler Division's operating income and ROI, assuming that the division manager accepts only the Toy #1 project.
c.
Compute the Toddler Division's operating income and ROI, assuming that the division manager accepts only the Toy #2 project.
d.
Compute the Toddler Division's operating income and ROI, assuming that the division manager accepts both projects.
(Round all computations to the nearest two decimal places.)
Correct Answer:
Verified
Correct Answer:
Verified
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