Question: Can you explain question c? Question #1: Assume the Brando Division of MH Enterprises, Inc. had the following results this past year (expressed in thousands).
Can you explain question c?
Question #1: Assume the Brando Division of MH Enterprises, Inc. had the following results this past year (expressed in thousands). The companys management has a required rate of return of 10% and MH Enterprises weighted average cost of capital is 8%.. Mh Enterprises effective tax rate is 30%.
| Sales | $3,000,000 |
| Operating income | $500,000 |
| Total assets | $4,500,000 |
| Current liabilities | $300,000 |
- What is Brando Divisions return on investment? Be sure to show your work!
- What is Brando Divisions residual income? Be sure to show your work!
- Which is a better measure (ROI or residual income) to evaluate a Divisions performance. (Please note that you will need to research the advantages and disadvantages of ROI vs Residual Income. This question is not an opinion question.)
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