Question

The following selected data pertain to Brannard Company’s Construction Division for last year.
Sales ............... $2,000,000
Variable costs ............ $1,200,000
Traceable fixed costs ......... $200,000
Average invested capital (assets) ... $3,000,000
Current liabilities .......... $200,000
Required rate of return ........ 15%
Marginal tax rate .......... 36%
Weighted average cost of capital .... 12%

REQUIRED
A. Calculate the residual income.
B. Calculate the return on investment.
C. Calculate the economic value added.



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  • CreatedJanuary 26, 2015
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