6. Bailey uses ROI to measure the performance of its operating divisions and to reward its division managers. A summary of the annual reports from two of Baileys divisions is shown provided below. The companys weighted-average cost of capital is 11 percent.

	Division A				Division B
Total assets	$	6,160,000			$	8,590,000
Current liabilities	$	600,000			$	1,800,000
After-tax operating income	$	1,040,000			$	1,175,300
ROI		26	%			12	%

a. Based on ROI, Division A generates more profit per dollar of invested capital than Division B. Compute the EVA for Division A and Division B.

c. Suppose the manager of Division A was offered a one-year project that would increase her investment base by $300,000 and increase her divisional operating income by $36,000. Would she be motivated to invest in this project?