Multinational performance measurement, ROI, RI. Loren Press operates two printing presses that operate as separate divisions, one located in Dundas, Ontario, and the other in Lyon, France. The following information is available for 2005. The required rate ofreturn on investments is 15%.

Dundas Division Lyon Division Operating income $ 918,000 648,000 Euros Total assets $5,400,000 3,600,000 Euros Both investments were made on December 31, 2004. The exchange rate at the time of Loren’s investment in France on December 31, 2004, was 0.60 Euros = $1. During 2005, the Euro declined steadily in value, reaching an exchange rate on December 31, 2005, of 0.75 Euros = $1. The average exchange rate during 2005 is [(0.60 + 0.75) + 2] =

0.675 Euros = $1.

Required 1.

a. Calculate the Dundas Division’s return on investment for 2005.

b. Calculate the Lyon Division’s return on investment for 2005 in French francs.

Which division earned a better return on investment in 2005? Explain.

Senior management wants to compare the performance of the two divisions using residual incopie. Which division do you think had the better residual-income performance?

Explain your answer.

Qh the basis ofyour answers to requirements 1 and 2, which division is performing better?

you had to promote one of the division managers to vice-president, which would you choose? Explain.