Analyze the Change In The Financial Performance 

Question Description

Consider the following data for the most recent years from a division:

Operating Income$720,000$600,000

Assume that the minimum rate of return is 8%.

Two requirements:

Required 1: Following what we discussed in the lecture videos, analyze the change in the financial performance using basic measures, such as return on sales, asset turnover, return on investment, and residual income. In your own words, interpret what each measure and number tell us.

Required 2: A proposed new project, which requires an additional $1,000,000 investment, will generate $150,000 additional operating income. Should the division accept this new project and why? Show your work and reasoning.