Performance Auto Company operates a new car division (that sells high-performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some division financial measures for 2015 are as follows: Total Assets Current Liabilities Operating Income Required Rate of Return New Car Division Performance Parts Division $ 25 000 000 $ 21 500 000 $ 4 500 000 $ 5 000 000 $ 1 900 000 $ 2 150 000 13% 13% Required: 1. Calculate return on investment (ROI) for each division using operating income as a measure of income and total assets as a measure of investment. 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. 3. William Abraham, the new car division manager, argues that the performance parts division has "loaded up on a lot of short-term debt" to boost its RI. Calculate an alternative RI for each division that is not sensitive to the amount of short-term debt taken on by the performance parts division. Comment on the result. 4. Performance Auto Company, whose tax rate is 35%, has two sources of funds: long-term debt with a market value of $16,000,000 at an interest rate of 8% and equity capital with a market value of $11,000,000 and a cost of equity of 14%. Applying the same weighted-average cost of capital (WACC) to each division, calculate EVA for each division. 5. Use your preceding calculations to comment on the relative performance of each division