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Evaluate the two departments for Erica Enterprise. Department 1 Department 2 Total assets $138,000,000 $46,000,000 Non-interest-bearing liabilities $9,000,000 $4,600,000 Net operating income after taxes $24,000,000
Evaluate the two departments for Erica Enterprise.
| Department 1 | Department 2 | |
| Total assets | $138,000,000 | $46,000,000 |
| Non-interest-bearing liabilities | $9,000,000 | $4,600,000 |
| Net operating income after taxes | $24,000,000 | $11,800,000 |
| Required rate of returns | 12% | 11% |
Required:
- Compare the year's performance of the two departments in terms of ROI and RI.
- Which department has created the most wealth for Erica shareholders in the past year?
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Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
8th Canadian Edition
111950242X, 1-119-50242-5, 978-1119502425
