Foc (b)* Your answer is incorrect.How much would each division need to generate in new operating income in the fourth quarter to reach the company's desiredROI of 12% at year-end, assuming each division uses its available $54,000 to purchase a new investment? Assume it is a $54,000nondepreciable asset but still included in operating assets.Fourth quarter operating income needed $East102480West66-480 It is the end of the third quarter, and Margaret is evaluating the performance of two key divisions in the company. Both divisions had$54,000 cash available for investment in the fourth quarter, so Margaret is now analyzing each division before a potential investment.She has gathered the following condensed income statements and selected information from the balance sheet for each division. Thecompany's minimum required rate of return is 10%, while its weighted average cost of capital is 9%. Its effective tax rate is 25%SalesCOGSGross marginOperating expensesOperating incomeOperating assetsTotal assetsCurrent liabilitiesEast$830,000440,000$390,000344,000$46,000West$1,300,000760,000$540,000494,000$46,000$800,000 $500,000$1,100,000 $740,000$170,000$54,000

Return on investment is a measure of profitability used to evaluate an investment or project. The…

(b) * Your answer is incorrect. How much would each division need to generate in new operating income in the fourth quarter to reach the company's desire ROI of 12% at year-end, assuming each division uses its available $54,000 to purchase a new investment? Assume it is a $54,0 nondepreciable asset but still included in operating assets. Fourth quarter operating income needed East 102480 West 66480

(b) * Your answer is incorrect. How much would each division need to generate in new operating income in the fourth quarter to reach the company's desire ROI of 12% at year-end, assuming each division uses its available $54,000 to purchase a new investment? Assume it is a $54,0 nondepreciable asset but still included in operating assets. Fourth quarter operating income needed East 102480 West 66480

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 4P

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