New Venture Company operates a new car division and pre-owned. Some division financial measures for 2023 are as follows:

	New Car Division	Pre-Owned Division
Total Asset	$30,000,000	$25,000,000
Current Liabilities	$6,000,000	$8,000,000
Operating Income	$2,000,000	$2,000,000
Required Rate of Return	9%	9%

Required:

Question 1. Calculate return on investment (ROl) for each division using operating income as a measure of income and total assets as a measure of investment.

Question 2. Calculate residual income (RI) for each division using operating income as a measure of income and total assets minus current liabilities as a measure of investment.

Question 3. New Venture Company, whose tax rate is 30%, has two sources of funds: debt with a market value of $20,000,000 at an interest rate of 10% and equity capital with a market value of $10,000,000 and a cost of equity of 15%. Applying the same weighted-average cost of capital (WACC) to each division, calculate EVA for each division.