Question
It is the end of the third quarter. and Smyrna is evaluating the performance of tvvo key divisions in the company. Both divisions had $50,000
It is the end of the third quarter. and Smyrna is evaluating the performance of tvvo key divisions in the company. Both divisions had $50,000 cash available for investment in the fourth quarter, so Smyrna 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 companys minimum required rate of return is while its weighted average cost of capital is Its effective tax rate is 25% Sales Gross margin Operating expenses Operating income Operating assets Total assets Current liabilities $890,000 415.000 $475,000 $40,000 $800,000 $160,000 720,000 $530,000 490,000 $40,000 $500,000 $800,000 $50,000 Calculate the current ROI, RI, and EVA for each division through the third quarter.
It is the end of the third quarter, and Smyrna is evaluating the performance of two key divisions in the company. Both divisions had $50,000 cash available for investment in the fourth quarter, so Smyrna 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 9%, while its weighted average cost of capital is 8%. Its effective tax rate is 25% (a) F Your answer is partially correct. 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 e.g. 15,000 or in parenthesis e.g. (15,000).)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started