Answer the following independent questions. Support your answers with clearly identified

formulas and computation.

a. A company`s available data:

Sales $2,500,000

Net operating income 1,500,000

Return on investment 25%

Cost of capital 15%

Calculate the company`s total assets. Show your work

b. Using the data from question VI (a), calculate the residual income.

c. An automobile parts `company has three divisions:

Engines Brakes Windshields

Sales $ 8,000,000 $ 9,000,000 $ 10,000,000

Contribution

margin 2,000,000 2,500,000 3,500,000

Operating

income 1,500,000 1,500,000 2,750,000

Investment

base 12,000,000 14,000,000 16,000,000

The company`s desired rate of return is 15%.

a. Compute each divisions` ROI

b. Compute each divisions` residual income

c. Rank each division by both ROI and residual income

d. Explain which division has the best performance in the year and why.