A big company is in need of additional funds. As an accountant, you are asked to help the company provide this information to potential investors based on the following data (Note: It is assumed that the rate of return this year is 21% and the cost of capital is 12.5%)

1. Calculate the ROI, Residual Income. and Economic Value Added for each Division (SHOW CALCULATION PROCESS).

2. Analyze the result!

3. Which division is most likely to attract potential investors?

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INFORMATION DEPARTMENT STORE CONSTRUCTION MANUFACTURE Capital 3,750,000,000 5,200,000,000 7,500,000,000 Investment 1,000,000,000 1,500,000,000 3,500,000,000 Sales revenue 2,500,000,000 7,500,000,000 100,000,000,000 Profit before tax 999,000,000 1,250,000,000 45,000,000,000 Tax rate 35% 349,650,000 437,500,000 15,750,000,000 Net Profit 649,350,000 812,500,000 29,250,000,000 INFORMATION DEPARTMENT STORE CONSTRUCTION MANUFACTURE Capital 3,750,000,000 5,200,000,000 7,500,000,000 Investment 1,000,000,000 1,500,000,000 3,500,000,000 Sales revenue 2,500,000,000 7,500,000,000 100,000,000,000 Profit before tax 999,000,000 1,250,000,000 45,000,000,000 Tax rate 35% 349,650,000 437,500,000 15,750,000,000 Net Profit 649,350,000 812,500,000 29,250,000,000

Answer rating: 100% (QA)

ROI Net profit after tax Net assets RI Net profit after tax Net assets x Require... View the full answer