Question 1 10 marks Beeda Pty. Ltd. is a small Australian owned trading company. The company strongly believes in evaluating the performance of its stand-alone divisions using financial metrics such as ROI and residual income. For the year ended December 31, 2019, the following information was received about the performance of the construction division: Sales revenues $ 1,800,000 Operating income 450,000 Total assets 3,000,000 Current liabilities 2,000,000 Debt (interest rate: 5%) 400,000 Equity (book value) 600,000 For the purposes of divisional performance evaluation, the company defines investment as total assets and income as operating income (that is, income before interest and taxes). The company pays a flat rate of 25% in taxes on its income. The company's required rate of return is 4% on its investments. Required: 1. What was the construction division's ROI for the year? Is your calculated ROI figure acceptable to the company? Explain why or why not. (2 marks) 2. Based on the company's required rate of return of 4%, what was the construction division's residual income for 2019? Is your calculated RI figure acceptable to the company? Explain why or why not. (2 marks) 3. The company's CFO has heard about EVA and is curious about whether it might be a better measure to use for evaluating division managers. The company's three divisions have similar risk characteristics. The company's debt trades at book value while its equity has a market value approximately 125% to that of its book value. The company's cost of equity capital is 10%. Calculate each of the following components of EVA for the construction division, as we\" as the nal EVA figure: a. Net operating profit after taxes b. Weighted-average cost of capital (round your final answer to 2 decimal places) c. Investment, as measured for EVA calculations (4 marks) 4. Identify two advantages of EVA over ROI and RI as a measure used for performance evaluation. (2 marks)