Refer to the Racer Sports Data Set. Compute each division’s RI. Interpret your results. Are your results consistent with each division’s ROI?
Racer Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year:
Racer’s management has specified a target 15% rate of return. The company’s weighted average cost of capital (WACC) is 12%, and its effective tax rate is 35%.

  • CreatedApril 30, 2015
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