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Different Bases Envision Company has a target return on capital of 10%, In evaluating operations, management looks at book values (GAAP compliant) and current values.

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Different Bases Envision Company has a target return on capital of 10%, In evaluating operations, management looks at book values (GAAP compliant) and current values. Current values reflect managements estimates of asset values . The following financial information is available for October (5 thousands Software Division Consulting Division Venture Capital Division (Value Base) (Value Base) (Value Base) Book Current Book Current Book Current Sales 5200,000 $200,000 $450,000 $450,000 5625.000 5625.000 Preta Income 35.000 37,200 37.000 38.500 63,000 43,200 Operating 250.000 310.000185.000 175.000 700.000 720.000 Current abes 30000 30.000 20,000 20.000 65.000 65,000 Required a. Compute the return on investment using both book and current values for each division. (Round answers to three decimal places. For ROI calculations. Envision uses operating assets as the investment base. Book Value Current Value Software 0 Consulting Venture Capital 0 Ooo b. Compute the residual income for both book and current values for each division Note: Use a negative sign with answers, when appropriate. Book Value Current Value Software OS Consulting 0 . Venture Capital 0 0 C Compute the economic value added income for both book and current values for each division if the tax rate is 20 percent and the weighted average cost of capital is 8 percent. Note: Use a negative sign with answers, when appropriate Book Value Current Value Software 5 Consulting Venture Capital 05 O O Check

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