The following data pertain to three divisions of Nevada Aggregates, Inc. The company’s required rate of return on invested capital is 8 percent. Division A Division B Division C Sales revenue ? $ 10,000,000 ? Income $ 400,000 $ 2,000,000 ? Average investment ? $ 2,500,000 ? Sales margin 20 % ? 25 % Capital turnover 1 ? ? ROI ? ? 20 % Residual income ? ? $ 120,000 Required: Suppose Division A’s sales margin increased to 25 percent, while its capital turnover remained constant. Compute the division’s new ROI.

(4 points) suppose the production function in the solow model is given by yt = ak¯ 3/4 t l 1/4 t . (a) what are the five equations and five unknowns that summarize the solow model? (b) show the transition dynamics in the solow model if ¯sy0 < ¯dk0. make sure you label the axes, curves, initial level of capital and steady-state level of capital. (c) solve for capital, output, capital per person, and output per person in the steady state. (d) if a¯ = 2, l¯ = 4, ¯s = 0.2, and ¯d = 0.05, calculate the steady-state level of capital and output per person.

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Carmen co. can further process product j to produce product d. product j is currently selling for $20 per pound and costs $15.75 per pound to produce. product d would sell for $38 per pound and would require an additional cost of $8.55 per pound to produce. what is the differential revenue of producing product d?