Question 1

A company has two divisions with the following information:

Division 1 Division 2

Sales: $3,000,000 Sales: $2,000,000

Operating Income: $750,000 Operating Income: $700,000

Assets Jan. 1: $5,000,000 Assets Jan. 1: $2,500,000

Assets Dec. 31: $5,500,000 Assets Dec. 31: $2,750,000

The Minimum required rate of return for the company for all of its divisions is 25% and its cost of capital is 12%. The company has a tax rate of 40%. Calculate the following ratios for both divisions:

Return on Investment

Margin

Turnover

Residual income

Economic Value Added

***Please clearly label all parts of the work, show all steps and work and complete in an excel file******