EKPN Company has two investment centre divisions, California & Toronto. EKPNs strategy is developing innovative manufacturing solutions to meet its customers needs. EKPN also prides itself on delivering its innovative solutions in a timely fashion.

The following information pertains to the 2019 year:

California Revenues $3,360,000 and Toronto is $1,680,000.

Current liabilities $216,000 (California) $120,000 (Toronto)

Operating income $300,000 (California) $96,000 (Toronto)

Average operating assets $2,160,000 (California) $1,080,000 (Toronto)

After tax operating income $204,000 (California) $69,600 (Toronto)

Total capital employed $1,860,000 (California) $960,000 (Toronto)

Actual cost of capital 9%(California) 9% (Toronto)

The California division has the opportunity to invest in some innovative technology to help design manufacturing solutions. The proposed investment would add operating income of $28,800 and would require additional computer equipment of $240,000. Currently, EKPN uses ROI to evaluate the performance of its Divisions. Required: (round to 4 decimal places)

a) Calculate the ROI for each division for 2019.

b) As the manager of the California division would you invest in the innovative technology project? Show calculations to support your response.

c) EKPN is considering changing from ROI to EVA to evaluate Divisional performance. Calculate the EVA for each division.

d) Discuss at least one advantage and one disadvantage of using EVA versus ROI as a performance measure.

e) List the 3 non-financial perspectives of the balanced scorecard and provide, with explanation, one performance measure for each perspective that would be suitable for EKPNs divisions.