Question: Consider the following data, which relate to the two divisions of Oak Ridge Products: Division 1 Division 2 Total assets $68,300,000 $23,100,000 Noninterest-bearing current liabilities

Consider the following data, which relate to the two divisions of Oak Ridge Products:

Division 1 Division 2
Total assets $68,300,000 $23,100,000
Noninterest-bearing current liabilities 4,490,000 2,400,000
NOPAT 11,200,000 5,900,000
Required rate of return 11% 10%

Compare the two divisions in terms of return on investment and residual income. In the past year, which division has created the most wealth for Oak Ridge shareholders? (Round ROI to 2 decimal place, e.g. 15.25%. Enter negative answers preceding either - sign, e.g. -45 or in parentheses, e.g. (45).)

Division 1 Division 2
ROI

%

%
Residual income/EVA

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!