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ROI, Residual Income, and EVA with Different Bases Envision Company has a target return on capital of 12 percent. The following financial information is available
ROI, Residual Income, and EVA with Different Bases Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands): Software Division Consulting Division Venture Capital Division Sales Income Assets Liabilities (Value Base) (Value Base) Book Current Book Current $140,000 $140,000 $240,000 $240,000 16,750 16,200 20,900 24,520 70,000 90,000 100,000 110,000 10,000 10,000 14,000 14,000 (Value Base) Book Current $840,000 $840,000 61,230 56,420 610,000 40,000 590,000 40,000 Required a. Compute the return on investment using both book and current values for each division. Round answers to three decimal places. Software Book Value Current Value Consulting Venture Capital b. Compute the residual income for both book and current values for each division. Use negative signs with answers, when appropriate. Software Consulting Venture Capital Book Value Current Value $ $ c. Compute the economic value added income for both book and current values for each division if the tax rate is 30 percent and the weighted average cost of capital is 10 percent. Use negative signs with answers, when appropriate. Book Value Current Value Software Consulting $ Venture Capital $
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