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 Software Division Consulting Division Consulting Division Venture Capital Division Venture Capital Division (Value Base) (Value Base) (Value Base) (Value Base) (Value Base) (Value Base) Book Current Book Current Book Current Sales $100,000 $100,000 $200,000 $200,000 $800,000 $800,000 Income 12,250 11,700 16,400 20,020 56,730 51,920 Assets 70,000 90,000 100,000 110,000 610,000 590,000 Liabilities 10,000 10,000 14,000 14,000 40,000 40,000 a) Compute the return on investment using both book and current values for each division Round answers to three decimal places Book Value Current Value Software Consulting Venture Capital b) Compute the residual income for both book and current values for each division Use negative signs with answers, when appropriate Book Value Current Value Software $3,850 $900 Consulting $4,400 $6,820 Venture Capital ($16,470) (18,880) 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 Book Value Current Value Software $ $ Consulting $ $ Venture Capital $ $

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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	Software Division	Consulting Division	Consulting Division	Venture Capital Division	Venture Capital Division
	(Value Base)	(Value Base)	(Value Base)	(Value Base)	(Value Base)	(Value Base)
	Book	Current	Book	Current	Book	Current
Sales	$100,000	$100,000	$200,000	$200,000	$800,000	$800,000
Income	12,250	11,700	16,400	20,020	56,730	51,920
Assets	70,000	90,000	100,000	110,000	610,000	590,000
Liabilities	10,000	10,000	14,000	14,000	40,000	40,000

a) Compute the return on investment using both book and current values for each division. Round answers to three decimal places.

	Book Value	Current Value
Software	?????	?????
Consulting	?????	?????
Venture Capital	?????	?????

b) Compute the residual income for both book and current values for each division. Use negative signs with answers, when appropriate.

	Book Value	Current Value
Software	$3,850	$900
Consulting	$4,400	$6,820
Venture Capital	($16,470)	(18,880)

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.