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Pool Accessories, Inc., has two divisionsFurniture and Supplies. Assume for both divisions that the tax rate is 30 percent, and the cost of capital is

  1. Pool Accessories, Inc., has two divisionsFurniture and Supplies. Assume for both divisions that the tax rate is 30 percent, and the cost of capital is 8%. The following segmented financial information is for the most recent fiscal year ended December 31.

Furniture Division

Supplies Division

Sales

$3,000,000

$1,000,000

Cost of goods sold

1,600,000

430,000

Allocated overhead

375,000

125,000

Selling and administrative expenses

250,000

200,000

Average net operating assets

$8,500,000

2,100,000

  1. Using Return on Investment as the measure of profitability, which division is most profitable? (Show your calculations) (10.4)

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