Cold Chain, current year: ROI = $2,236,000 / $13,000,000 = 17.2% (about 17%). Imputed interest = 11% x $13,000,000 = $1,430,000, so RI = $2,236,000 - $1,430,000 = $806,000.
Solar Kits, current year: ROI = $684,000 / $4,500,000 = 15.2% (about 15%). Imputed interest = 11% x $4,500,000 = $495,000, so RI = $684,000 - $495,000 = $189,000.
Blast-freezing facility alone: ROI = $436,800 / $3,250,000 = 13.4% (about 13%). Imputed interest = 11% x $3,250,000 = $357,500, so RI = $436,800 - $357,500 = $79,300.
Cold Chain with the facility: profit $2,236,000 + $436,800 = $2,672,800; net assets $13,000,000 + $3,250,000 = $16,250,000. ROI = $2,672,800 / $16,250,000 = 16.4% (about 16%). RI = $2,672,800 - (11% x $16,250,000 = $1,787,500) = $885,300.
📋 Objective: 5.2 (Divisional performance and transfer pricing)