ROI and Investment Decisions Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Food
Posted: Wed Apr 27, 2022 11:09 am
ROI and Investment Decisions Allard, Inc., presented two years
of data for its Frozen Foods Division and its Canned Foods
Division. Frozen Foods Division: Year 1 Year 2 Sales $35,400,000
$37,900,000 Operating income 1,430,000 1,600,000 Average operating
assets 7,680,000 7,680,000 Canned Foods Division: Year 1 Year 2
Sales $11,500,000 $12,900,000 Operating income 660,000 510,000
Average operating assets 5,600,000 5,600,000 At the end of Year 2,
the manager of the Canned Foods Division is concerned about the
division's performance. As a result, he is considering the
opportunity to invest in two independent projects. The first is
juice boxes for elementary school children. The second is fruit and
veggie pouches for kids on the go. Without the investments, the
division expects that Year 2 data will remain unchanged. The
expected operating incomes and the outlay required for each
investment are as follows: Juice Box Fruit Pouch Operating income
$28,000 $15,500 Outlay 200,000 150,000 Allard's corporate
headquarters has made available up to $570,000 of capital for this
division. Any funds not invested by the division will be retained
by headquarters and invested to earn the company's minimum required
rate of return, 9 percent. Required: Round your answers to four
decimal places before converting to a percentage. For example,
.06349 would be rounded to .0635 and entered as "6.35" percent. 1.
Compute the ROI for each investment. Juice Box ROI fill in the
blank 1 14 % Fruit Pouch ROI fill in the blank 2 10.33 % 2. Compute
the divisional ROI for each of the following four alternatives: a.
The juice box is added. fill in the blank 3 % b. The fruit pouch is
added. fill in the blank 4 % c. Both investments are added. fill in
the blank 5 % d. Neither investment is made; the status quo is
maintained. fill in the blank 6 % Assuming that divisional managers
are evaluated and rewarded on the basis of ROI performance, which
alternative do you think the divisional manager will choose? Both
Projects 3. Which of the data analytic types—descriptive,
diagnostic, predictive or prescriptive—is used in determining
which, if any, new investment to make? Prescriptive
of data for its Frozen Foods Division and its Canned Foods
Division. Frozen Foods Division: Year 1 Year 2 Sales $35,400,000
$37,900,000 Operating income 1,430,000 1,600,000 Average operating
assets 7,680,000 7,680,000 Canned Foods Division: Year 1 Year 2
Sales $11,500,000 $12,900,000 Operating income 660,000 510,000
Average operating assets 5,600,000 5,600,000 At the end of Year 2,
the manager of the Canned Foods Division is concerned about the
division's performance. As a result, he is considering the
opportunity to invest in two independent projects. The first is
juice boxes for elementary school children. The second is fruit and
veggie pouches for kids on the go. Without the investments, the
division expects that Year 2 data will remain unchanged. The
expected operating incomes and the outlay required for each
investment are as follows: Juice Box Fruit Pouch Operating income
$28,000 $15,500 Outlay 200,000 150,000 Allard's corporate
headquarters has made available up to $570,000 of capital for this
division. Any funds not invested by the division will be retained
by headquarters and invested to earn the company's minimum required
rate of return, 9 percent. Required: Round your answers to four
decimal places before converting to a percentage. For example,
.06349 would be rounded to .0635 and entered as "6.35" percent. 1.
Compute the ROI for each investment. Juice Box ROI fill in the
blank 1 14 % Fruit Pouch ROI fill in the blank 2 10.33 % 2. Compute
the divisional ROI for each of the following four alternatives: a.
The juice box is added. fill in the blank 3 % b. The fruit pouch is
added. fill in the blank 4 % c. Both investments are added. fill in
the blank 5 % d. Neither investment is made; the status quo is
maintained. fill in the blank 6 % Assuming that divisional managers
are evaluated and rewarded on the basis of ROI performance, which
alternative do you think the divisional manager will choose? Both
Projects 3. Which of the data analytic types—descriptive,
diagnostic, predictive or prescriptive—is used in determining
which, if any, new investment to make? Prescriptive