INVESTMENT CENTER: The AAA Division has permanent current assets of P50,000 and operating non-current assets of...
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INVESTMENT CENTER: The AAA Division has permanent current assets of P50,000 and operating non-current assets of 350,000. It provides annual operating income after tax of P100,000. Its cost of capital is 15% but the minimum required rate of return by the entity is 16%. SHOW SOLUTIONS A.How much is its current return on investment? B.How much is its economic value added? C.How much is its residual income? D.Assume that the Senna Division is presented by the head office to manage a P60,000 investment option yielding a 20% on its investment. Should the Division agree to manage this investment opportunity?* INVESTMENT CENTER: The AAA Division has permanent current assets of P50,000 and operating non-current assets of 350,000. It provides annual operating income after tax of P100,000. Its cost of capital is 15% but the minimum required rate of return by the entity is 16%. SHOW SOLUTIONS A.How much is its current return on investment? B.How much is its economic value added? C.How much is its residual income? D.Assume that the Senna Division is presented by the head office to manage a P60,000 investment option yielding a 20% on its investment. Should the Division agree to manage this investment opportunity?*
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Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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