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PLEASE ANSWER ME THE QUESTIONS CLEARLY. THANKS! Problem The financial results for 3 companies in the Marx Group for 2006 are shown below: Company Groucho
PLEASE ANSWER ME THE QUESTIONS CLEARLY. THANKS!
Problem The financial results for 3 companies in the Marx Group for 2006 are shown below: Company Groucho Chico Harpo Assets Operating profit Administrative expenses Cost of capital per annum 7.5m 1.5m 0.8m 7% 17.5m 1.4m 0.3m 5% 12.5m 2.0m 0.65m 10% Required: a. Calculate the ROCE for each company for 2006. b. Calculate the EVA each company for 2006. i. c. If each company is presented with an investment opportunity that is expected to yield a return of 9%. Which company(s) would accept and which company(s) would reject the investment if their performance is measured by ROCE, and why? ii. Which company(s) would accept and which company(s) would reject the investment if their performance is measured by EVA, and whyStep by Step Solution
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