Multinational performance measurement, ROI, RI. The Grandlund Corporation manu- factures similar products in Canada and Norway. The Canadian and Norwegian operations are organized as decentralized divisions. The following information is available for 2011; ROI is calculated as operating income divided by total assets:

Both investments were made on December 31, 2010. The exchange rate at the time of Grandlund’s investment in Norway on December 31, 2010, was 6 kroner = $1. During 2011, the Norwegian kroner increased steadily in value so that the exchange rate on December 31, 2011, is 7 kroner = $1. The average exchange rate during 2011 is [(6 + 7)/2] = 6.5 kroner = $1.
REQUIRED 1.

a. Calculate the Canadian division’s operating income for 2011.

b. Calculate the Norwegian division’s ROI for 2011 in kroner.
2. Top management wants to know which division earned a better ROI in 2011. What would you tell them? Explain your answer. Se «ad ORG nie ee 3. Which division do you think had the better RI performance? Explain your answer. Convers abonn ned Oil The required rate of return on investment (calculated in Canadian dollars) is 12%.LO1

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Operating income Total assets ROI Canadian Division Norwegian Division P $8,000,000 8,100,000 kroner 15% 52,500,000 kroner 7