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Bramble Corporation operates three divisionsArcher, Barrett, and Corvell. Division managers are evaluated based on the divisions return on investment, and historically, the Corvell division has

Bramble Corporation operates three divisionsArcher, Barrett, and Corvell. Division managers are evaluated based on the divisions return on investment, and historically, the Corvell division has consistently outperformed the other two divisions. Brambles senior management team has recently discovered that the Corvell Division manager has chosen not to invest in projects that would have been beneficial to the organization as a whole, and they are concerned that the current practice of evaluating the division managers performance using return on investment may have contributed to these decisions. Therefore, the senior management team is considering the use of residual income or EVA to evaluate the division managers performance. The following data is taken from the most recent year of operations.

Archer

Barrett

Corvell

Assets

$29,935,000 $19,926,000 $7,997,000

Current liabilities

2,256,900 756,100 331,400

Operating income

4,490,250 3,387,420 1,519,430

Minimum rate of return

13% 13% 13%

Weighted average cost of capital

8% 8% 8%

Tax rate

30% 30% 30%

(a) Calculate the return on investment, residual income, and EVA for each division. (Round ROI answers to 0 decimal places, e.g. 15% and all other answers to 0 decimal places, e.g. 5,215. If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parentheses, e.g. (5,125).)

Return on Investment

Archer

enter percentages %

Barrett

enter percentages %

Corvell

enter percentages %

Residual Income

Archer

$enter a dollar amount

Barrett

$enter a dollar amount

Corvell

$enter a dollar amount

EVA

Archer

$enter a dollar amount

Barrett

$enter a dollar amount

Corvell

$enter a dollar amount

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