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Question 2 Tesla Trading Ltd has two (2) divisions, Photovoltaic Equipment and High-Tech Batteries. The following information is provided for both divisions: High-Tech Photovoltaic Batteries

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Question 2 Tesla Trading Ltd has two (2) divisions, Photovoltaic Equipment and High-Tech Batteries. The following information is provided for both divisions: High-Tech Photovoltaic Batteries Equipment Sales (+) 45,000,000 30,000,000 Costs (+) 34,500,000 20,250,000 Current assets (A) 7.500.000 6,000,000 Non-current Assets (4) 22,500,000 9,000,000 Controllable costs are typically 75% of divisional costs, the balance of 25% being allocated overheads from the head office. The overall company cost of capital is 15%. Divisions are treated as investment centres. Required: a) Compute the following for the divisions and comment on your result: i. Absolute profit ii. Return on investment Residual income b) What are cost centres, profit centres and investment centres in divisionalized firms? (30 points)

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