managerial accouting

The manager of the MOBS division of oce has a current forecast for sales for the next years 5 60,000,000 and a forecast profit margin 11%. The current invested capital for the MOBBS division is $35,000,000 a. Calculate the return on Investment for the MOBS divisions based on these forecast amounts. b. The manager of MOBS has worked through the financial projections for the proposed expansion of the network and has estimated the following would apply if the expansion took place. Total projected sales would increase to $72,000,000; the profit margin would fall to approximately 10% and the total invested capital would increase to $52,500,000. 1. Recalculate the ROI if the expansion to the network was to go ahead with these new projections. 2. The manager begins to consider options for increasing the projected ROI over this period and is considering lowering the customer support (help staff) and reducing the routine maintenance costs on the existing network. Calculate the amount of cost reduction that would be necessary to obtain a projected ROI of 16%. 3. What are the issues that may oceur by using ROI to measures performance may arises when only ROI is used to measure performance? c. OCC have been considering using Economic Value Add (EVA) as a second measure of performance,, (so that a positive result would allow a bonus to be paid) Complete 1. Calculated the forecast EVA both without and with the proposed expansion of the mobile network. Assume the same amounts of Before Tax profit but use 30% tax and reduee the invested capital by 7,500,000 (in both cases) to allow for creditors and other items that do not require company funding. Also, assume OCC's weighted Average cost of capital would be 9% for both scenarios. 2. Considering the result of c) (1) is the manager for the MOB Division more likely to support the acquisition proposal if EVA is also considered when determining the manger's bonus. Why or why Not