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It is the end of the third quarter, and Kimberly is evaluating the performance of two key divisions in the company. Both divisions had
It is the end of the third quarter, and Kimberly is evaluating the performance of two key divisions in the company. Both divisions had $51,000 cash available for investment in the fourth quarter, so Kimberly is now analyzing each division before a potential investment. She has gathered the following condensed income statements and selected information from the balance sheet for each division. The company's minimum required rate of return is 10%, while its weighted average cost of capital is 9%. Its effective tax rate is 25% East West Sales COGS $910,000 $1,100,000 380,000 660,000 Gross margin $530,000 $440,000 Operating expenses 490,000 400,000 Operating income $40,000 $40,000 Operating assets $800,000 $500,000 Total assets $1,100,000 $830,000 Current liabilities: $150,000 $45,000 Calculate the current ROI, RI, and EVA for each division through the third quarter. For ROI purposes, operating assets are considered investments. (Enter ROI as a decimal, not as a percentage. Round ROI to 4 decimal places, e.g. 0.1526. Enter negative amounts with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).) ROI RI EVA East $ $ West
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