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PLEASE HELP ME ASAPPP...... Racer Auto Company operates a New Car Division (that sells high performance sports cars) and a Parts Division (that sells performance

PLEASE HELP ME ASAPPP......

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Racer Auto Company operates a New Car Division (that sells high performance sports cars) and a Parts Division (that sells performance improvement parts for family cars). Some division financial measures for the year are as follows: (Click the icon to view the data.) Requirement 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. (Enter the ROI as a percent rounded to one decimal place in the format X.X\%.) 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. Racer Auto Company, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $17,000,000 at an interest rate of 10% and equity capital with a market value of $13,000,000 and a cost of equity of 16%. Applying the same weighted-average cost of capital (WACC) to each division, calculate economic value added (EVA) for each division. 5. Use your preceding calculations to comment on the relative performance of each division

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