Business, 28.06.2021 17:20, kaitie60

Lumberton Home Maintenance Company (LHMC) earned operating income of $6,000,000 on operating assets of $62,500,000 during Year 2. The Tree Cutting Division earned $1,000,000 on operating assets of $10,000,000. LHMC has offered the Tree Cutting Division $1,250,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $112,500. LHMC has a desired return on investment (ROI) of 8 percent. Required
a. Calculate the return on investment for LHMC, the Tree Cutting Division, and the additional investment opportunity.
b. Calculate the residual income for LHMC, the Tree Cutting Division, and the additional investment opportunity

Answers: 3

Show answers

Answers

answered: xoxzyanya61

Lumberton Home Maintenance Company (LHMC)

LHMC Tree Cutting Additional

Division Investment

a. Return on Investment 9.6% 10% 9%

b. Residual income $1,000,000 $200,000 $12,500

Explanation:

a) Data and Calculations:

LHMC Tree Cutting Additional

Division Investment

Operating income $6,000,000 $1,000,000 $112,500

Operating assets $62,500,000 $10,000,000 $1,250,000

a. Return on Investment 9.6% 10% 9%

b. Residual income $1,000,000 $200,000 $12,500

Return on investment = Operating income/Operating assets * 100

Residual income = Operating income Minus (Desired ROI * Operating assets)

Desired Return on Investment (ROI) = 8%

answered: Guest

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

answered: Guest

Gamma-rays can kill living cells, a fact which medicine uses to its advantage, using gamma-rays to kill cancerous cells.

Other questions on the subject: Business

Business, 21.06.2019 19:50, kennrecklezz

Which of the following best explains why treasury bonds have an effect on the size of the money supply? a. the amount of treasury bonds in circulation affects both unemployment and inflation. b. the government can spend more money and charge lower taxes by using treasury bonds. c. the federal reserve bank can buy and sell these bonds to raise or lower bank deposits. d. the interest paid on treasury bonds influences the interest rates charged by private banks. 2b2t

Answers: 1

continue

Business, 22.06.2019 11:30, barn01

17. chef a says that garnish should be added to a soup right before serving. chef b says that garnish should be cooked with the other ingredients in a soup. which chef is correct? a. chef a is correct. b. both chefs are correct. c. chef b is correct. d. neither chef is correct. student c incorrect which is correct answer?

Answers: 2

continue

Business, 22.06.2019 12:10, felisha1234

Bonds often pay a coupon twice a year. for the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. using the values of cash flows and number of periods, the valuation model is adjusted accordingly. assume that a $1,000,000 par value, semiannual coupon us treasury note with three years to maturity has a coupon rate of 3%. the yield to maturity (ytm) of the bond is 7.70%. using this information and ignoring the other costs involved, calculate the value of the treasury note:

Answers: 1

continue

Business, 22.06.2019 22:00, thruhdyjgrt

Acompany's sales in year 1 were $300,000, year 2 were $351,000, and year 3 were $400,000. using year 2 as a base year, the sales percent for year 3 is

Answers: 2

continue

Do you know the correct answer?

Lumberton Home Maintenance Company (LHMC) earned operating income of $6,000,000 on operating assets...