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PAGE LAYOUT REFERENCES MAILINGS REVEW VEW 1 - 2 X A AEEEEEX 15 AYA O . . . Paragraph el Body Text 1 Headings are
PAGE LAYOUT REFERENCES MAILINGS REVEW VEW 1 - 2 X A AEEEEEX 15 AYA O . . . Paragraph el Body Text 1 Headings are LUSAKA Plc has two divisions, GAMMA and OMEGA, whose respective performances are under review. Division GAMMA is currently earning a profit of K35.000 and has net assets of K150,000 Division OMEGA currently earns a profit of K70,000 with net assets of K325,000.5 LUSAKA Ple-has a current cost of capital of 15% Required: (6) Explain the difference between a profit centre and an investment centre of an organisation [3.Marks) (b) Using the information above, calculate the return on investment and residual income figures for the two divisions under review and comment on your results. - 15-Marks) (c)-Explain which method of performance evaluation (i.e. return on investment or residual income) is more useful when comparing divisional performance. [2 Marks)
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