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1. O'Malley Company requires a return on capital of 15 percent. The following information is available for 2018: Sales Income Assets Division X Division Y
1. O'Malley Company requires a return on capital of 15 percent. The following information is available for 2018: Sales Income Assets Division X Division Y Division 2 Book Current Book Current Book Current $200,000 $200,000 $400,000 $400,000 $600,000 $600,000 24,000 20,000 32,000 34,000 37,500 39,000 120,000 160,000 180,000 200,000 450,000 435,000 a. Required: Compute return on investment using both book and current values for each division. (Round answer to three decimal places.) b. Compute residual income for both book and current values for each division. Does book value or current value provide the better basis for performance evaluation? d. Which division do you consider the most successful? c
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