Question: Question 2: (20 marks) Explain the value chain and discuss the advantages gained by performing a Value Chain Analysis (VCA). The following summary information is
Question 2: (20 marks)
- Explain the value chain and discuss the advantages gained by performing a Value Chain Analysis (VCA).
- The following summary information is available regarding CLU Plc.
| CLU Plc. | ||
| Profit Plan |
| |
| For the year ending Dec. 31, 2020 | ||
| Sales Revenue | $320,000 | |
| Operating Income | $26,000 | |
| Shareholders equity | $120,000 | |
| Operating Assets | $60,000 | |
| Total Liabilities | $40,000 | |
| WACC | 22% | |
| Tax rate | 20% | |
| Return from Project A | $53,500 | |
| Cost of project A | $43,000 | |
Required: Compute and analyze the:
- Return on Investment (ROI) for project A
- Return on Equity (ROE) and its components for the company.
- Residual income (RI)
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