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Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands) Software Division Consulting Division
Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands) Software Division Consulting Division Venture Capital Division (Value Base) (Value Base) (Value Base) Book Current Book Current Book Current Sales$110,000 $110,000 S210,000 S210,000 S810,000 $810,000 Income 13,750 13,200 17,900 21,520 Assets Liabilities 10,000 10,000 14,000 14,000 53,420 70,000 90,000 100,000 110,000 610,000 590,000 40,000 58,230 40,000 Required a. Compute the return on investment using both book and current values for each division. Round answers to three decimal places Book Value Current Value Software 0.196 0.147 Consulting 0.179 0.196 Venture Capital 0.095 0.091 V b. Compute the residual income for both book and current values for each division. Use negative signs with answers, when appropriate Book Value Current Value Software 450 Consulting Venture Capital C. Compute the economic value added income for both book and current values for each division if the tax rate is 30 percent and the weighted average cost of capital is 10 percent. Use negative signs with answers, when appropriate. Book Value Current Value Software 190 X Consulting Venture Capital
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