Question #2 Consider the following information about a potential project: Investment required $15,000,000 Expected annual project revenue $17,000,000 Expected annual project expenses $14,500,000 Required rate of return 15% Current division return on investment 19% a) Calculate the project’s return on investment. b) Based solely on ROI, is this project in the firm’s best interests? Why or why not? c) Is this project in the division manager’s best interests? Why or why not? d) Perform DuPont Analysis on this project. e) What is the project’s residual income?
Question #2 Consider the following information about a potential project: Investment required?$15,000,000??Expected annual project revenue?$17,000,000??Expected annual project expenses?$14,500,000??Required rate of return?15%??Current division return on investment?19%?? a) Calculate the project’s return on investment. b) Based solely on ROI, is this project in the firm’s best interests? Why or why not? c) Is this project in the division manager’s best interests? Why or why not? d) Perform DuPont Analysis on this project. e) What is the project’s residual income?
Attachments:
ACTq2.docx