The following information was compiled by the company's accountant for one of the company's divisions for...
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The following information was compiled by the company's accountant for one of the company's divisions for the last quarter: Division XXX $3,650,000 $270,000 $2,450,000 $350,000 Sales Operating income Total assets Current liabilities Target rate of return WACC Tax rate Required (Show all computations): 1. Compute the following performance measures: ROI, RI, and EVA. (14 marks) 2. Assume that the division manager is considering an investment opportunity that would yield $35.000 in annual operating income and cost the division $240.000. Is this a good investment opportunity from the perspective of top management? Why or why not? (5 marks) 14% 12% 30% The following information was compiled by the company's accountant for one of the company's divisions for the last quarter: Division XXX $3,650,000 $270,000 $2,450,000 $350,000 Sales Operating income Total assets Current liabilities Target rate of return WACC Tax rate Required (Show all computations): 1. Compute the following performance measures: ROI, RI, and EVA. (14 marks) 2. Assume that the division manager is considering an investment opportunity that would yield $35.000 in annual operating income and cost the division $240.000. Is this a good investment opportunity from the perspective of top management? Why or why not? (5 marks) 14% 12% 30%
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1 Compute the following performance measures ROI RI and EVA a Return on Investment ROI ROI Operating ... View the full answer
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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