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Question 2 (E13.25) Supergroup Company has two retail divisions, which reported the following results for last year: Sporting goods division Electronics division Profit $
Question 2 (E13.25) Supergroup Company has two retail divisions, which reported the following results for last year: Sporting goods division Electronics division Profit $ 2700 000 $ 600 000 Average invested capital 18 000 000 3 000 000 ROI 15% 20% Required: 1. Which was the more successful division? Think carefully about this, and explain your answer. 2. Calculate each division's residual income under each of the following assumptions about the firm's minimum required rate of return: a. 12% b. 15% c. 20%
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