Anderson Ceramics, a division of Bentfield Corporation, has an operating income of $78,000 and total assets of $416,000. The required rate of return for the company is 13%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers.
The manager of Anderson Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investment would earn $15,600 for the company.
Requirements:
1. What is the original return on investment (ROI) for Anderson Ceramics (before making any additional investment)?
2. What would the ROI be for Anderson Ceramics if this investment opportunity were undertaken? Would the manager of the Anderson Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not?
3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Bentfield Corporation? Why or why not?
4. What would the residual income (RI) be for Anderson Ceramics if this investment opportunity were to be undertaken? Would the manager of the Anderson Ceramics division want to make this investment if she were evaluated based on RI? Why or why not?
5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Bentfield Corporation? Why or why not?
6. Which performance measurement method, ROI or RI, promotes goal congruence? Why?

Lo.2, 3, 9 lori, who is single, purchased 5-years class property for $200,00 and 7-years class property for $420,000 on may 20, 2018. lori experts the taxable income derived form the business (without regard to the amount expensed under ⧠179) to be about $550,000. lori has determined that she should elect immediate ⧠179 expensing in the amount of $520,000, but she doesn’t know which asset she should completely expense under ⧠179. she does not claim any available additional first-year depreciation. a. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 5-year class asset. b. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 7-year class asset. c. what is your advice for lori? d. assume that lori is in the 24% marginal tax bracket and that she uses ⧠179 on the 7-year asset. determine the present value of the tax savings from the depreciation deductions for both assets. see appendix g for present value factors, and assume a 6% discount rate. e. assume the same facts as in part (d), except that lori decides not to use ⧠179 on either asset. determine the present value of the tax savings under this choice. in addition, determine which option lori should choose. f. present your solution to parts (d) and (e) of the problem in a spreadsheet using appropriate microsoft excel formulas. e-mail your spreadsheet to your instructor with a two-paragraph summary of your findings.

Match the steps for conducting an informational interview with the tasks in each step.

Melissa is a very generous single woman. before this year, she had given over $11,400,000 in taxable gifts over the years and has completely exhausted her applicable credit amount. in the current year, melissa gave her daughter riley $100,000 and promptly filed her gift tax return. melissa did not make any other gifts this year. how much gift tax must riley pay the irs because of this transaction?