Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center)

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Sales Net Income Average Invested Assets Electronics $ 11,200,000 $ 620,500 $ 3,650,000 Sporting goods 7,500,000 882,000 4,900,000 1-a. Compute return on investment for each department. 1-b. Using return on investment, which department is most efficient at using assets to generate returns for the company? 2-a. Assume a target income level of 11.9% of average invested assets. Compute residual income for each department. 2-b. Which department generated the most residual income for the company? 3. Assume the Electronics department is presented with a new investment opportunity that will yield a 14.6% return on investment. Should the new investment opportunity be accepted?

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center)

Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Sales Net Income Average Invested Assets Electronics $ 11,200,000 $ 620,500 $ 3,650,000 Sporting goods 7,500,000 882,000 4,900,000 1-a. Compute return on investment for each department. 1-b. Using return on investment, which department is most efficient at using assets to generate returns for the company? 2-a. Assume a target income level of 11.9% of average invested assets. Compute residual income for each department. 2-b. Which department generated the most residual income for the company? 3. Assume the Electronics department is presented with a new investment opportunity that will yield a 14.6% return on investment. Should the new investment opportunity be accepted?