Question
Consider the following data, which relate to the two divisions of McIntyre Products: Division 1 Division 2 Total assets $68,800,000 $23,200,000 Noninterest-bearing current liabilities 4,500,000
Consider the following data, which relate to the two divisions of McIntyre Products: Division 1 Division 2 Total assets $68,800,000 $23,200,000 Noninterest-bearing current liabilities 4,500,000 2,330,000 NOPAT 12,500,000 5,920,000 Required rate of return 11% 10% Compare the two divisions in terms of return on investment and residual income. In the past year, which division has created the most wealth for McIntyre shareholders? (Round ROI to 2 decimal place, e.g. 15.25%.)
ROI
Division 1 %
Division 2 % %
Residual income
Divison 1
Division 2
EVA had highest return on investment and had highest residual income.
However, has created most wealth for McIntyre shareholders.
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