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Question 3: (15 marks total) A multinational corporation established a division in Germany as a subsidiary corporation, with an Initial investment in total assets of

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Question 3: (15 marks total) A multinational corporation established a division in Germany as a subsidiary corporation, with an Initial investment in total assets of 13 million C's, which cost the company $19,240,000 Canadian at the time. The company sent an experienced manager to run the division, and gave her a target of 12% required rate of return, promising a bonus if this was met and/or exceeded. After one year, the subsidiary manager was pleased to report an 18% ROI. You have been able to determine the following data pertaining to the subsidiary: Exchange rate at end of year was $1.42 Canadian to the Euro Operating income was earned evenly throughout the year The exchange rate changed approximately evenly throughout the year Required a. Calculate the subsidiary's income in 's. (3 marks) b. Calculate the subsidiary's return on investment in Canadian dollars. (6 marks) C Calculate the subsidiary's residual income in Canadian dollars. (6 marks)

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