[sholmes1086]

1. The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000.
The corporation requires a return on investment of 18%.

Required:
A. Calculate the company's return on investment (ROI) and residual income (RI).
B. Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net
Operating income of $12,950. Would it be in the best interests of the company to make this investment?
C. Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating
Income of $12,950. If the division planning to make the investment currently has a return on investment of 20%
And its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds
To make this investment? Explain why or why not.
D. Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating
Income of $12,950. If the division planning to make the investment currently has a residual income of $50,000
And its manager is evaluated based on the division's residual income, will the division manager be inclined to
Requet funds to make the investment? Explain why or why not.