Strong Welding Equipment Company produces and sells welding equipment nationally and internationally. Following is information about two divisions.

REQUIRED
A. Calculate each division€™s ROI.
B. Calculate each division€™s residual income.
C. Calculate each division€™s EVA.
D. Suppose the Brazilian division had an opportunity to invest $3,500,000 in a project that would generate sales of $5,000,000 and return on sales of 10%, or $500,000. Would the division manager be likely to undertake this project if he or she is evaluated using ROI? Explain.
E. Recommend a performance evaluation measure that would increase the managers€™ incentives to make decisions that would be in the best interests of theowners.

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Brazil U.S Invested capital (total assets) Net operating income Required rate of return Weighted average cost of capital Current liabilities After-tax income $4,000,000 $1,000,000 10% 9% $80,000 $600,000 $400,000 $120,000 10% 9% $10,000 $80,000