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Assume two divisions of a manufacturing company had the following sales, income from operations, and invested assets: Income Invested Sales from Operations Assets Division
Assume two divisions of a manufacturing company had the following sales, income from operations, and invested assets: Income Invested Sales from Operations Assets Division A $500,000 $ 90.000 $400,000 Division B 800,000 144,000 600,000 (1) Please calculate the rate of return on assets for each division above using the ROL formula from the top of page 1132. Please show your work and explain your results. (2) Please calculate the rate of return on assets for each division above using the DuPont formula from the top of page 1133. Please show your work and explain your results. (3) Is your rate of return different or the same from the two methods above? If your two answers were the same, please explain why we have both ROI formulas. In other words, isn't it redundant to have two ROI calculations that yield the same answer?
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