Six Flags Entertainment Corp operates theme parks in the United States, Mexico, and Europe. One of its first theme parks, Six Flags over Georgia, was built in the 1960s in Atlanta on a large tract of land that has appreciated enormously over the years. Although most of the rides and other attractions have a fairly short life, some of the major buildings that are still in use on the property have been fully depreciated since they were built. Assume that Six Flags over Georgia operates as an investment center with total assets that have a book value of $75 million and current liabilities of $5 million. Assume also that in the current year, this particular theme park had sales of $65 million and pretax division income of $12 million. The replacement cost of all the assets in this park is estimated to be $115 million. The company has a 20% tax rate and a target return of 10% and a cost of capital of 6%. Required a. Calculate the ROI, residual income, and EVA for Six Flags over Georgia using asset book value in the valuation basis for the investment center asset base. ROl (rounded to the nearest whole percentage point): % Residual income: $x million EVA: \$ million b. Repeat requirement (a) using replacement cost as the investment center asset value. ROL (rounded to the nearest whole percentage point): % Residual income: $x million EVA: $x million Full Belly Farm grows organic vegetables and sells them to distributors and local restaurants after processing. Assume the farm's leading product for restaurant customers is a mixture of organic green salad ingredients prepared and ready to serve. The company sells a large bag to restaurants for $30. It calculates the variable cost per bag at $20 (including $1 for local delivery), and the average total cost per bag is $24. Growing conditions have been very good this season and Full Belly has extra capacity. A representative of a restaurant association in another city has offered to buy fresh salad stock from the company to augment its regular supply during an upcoming international for The restaurant association wants to buy 3,000 bags during the next month for $22 per bag. Delivery to restaurants in the other city will cost the company $0.75 per bag. It can meet most of the order with excess capacity but would sacrifice 200 bags of regular sales to fill this special order. Please assist Full Belly Farm's management by answering the following questions. Required a. Using differential analysis, what is the impact on profits of accepting this special order? Short-term impact on profits from the special order: $ b. Should management consider nonquantitative issues before making a final decision? c. How would the analysis change if the special order were for 3,000 bags per month for the next five years? (Assume there would be no loss of regular sales and consider only quantitative factors.) Monthly long-term impact on profits from the special order: \$ Six Flags Entertainment Corp operates theme parks in the United States, Mexico, and Europe. One of its first theme parks, Six Flags over Georgia, was built in the 1960s in Atlanta on a large tract of land that has appreciated enormously over the years. Although most of the rides and other attractions have a fairly short life, some of the major buildings that are still in use on the property have been fully depreciated since they were built. Assume that Six Flags over Georgia operates as an investment center with total assets that have a book value of $75 million and current liabilities of $5 million. Assume also that in the current year, this particular theme park had sales of $65 million and pretax division income of $12 million. The replacement cost of all the assets in this park is estimated to be $115 million. The company has a 20% tax rate and a target return of 10% and a cost of capital of 6%. Required a. Calculate the ROI, residual income, and EVA for Six Flags over Georgia using asset book value in the valuation basis for the investment center asset base. ROl (rounded to the nearest whole percentage point): % Residual income: $x million EVA: \$ million b. Repeat requirement (a) using replacement cost as the investment center asset value. ROL (rounded to the nearest whole percentage point): % Residual income: $x million EVA: $x million Full Belly Farm grows organic vegetables and sells them to distributors and local restaurants after processing. Assume the farm's leading product for restaurant customers is a mixture of organic green salad ingredients prepared and ready to serve. The company sells a large bag to restaurants for $30. It calculates the variable cost per bag at $20 (including $1 for local delivery), and the average total cost per bag is $24. Growing conditions have been very good this season and Full Belly has extra capacity. A representative of a restaurant association in another city has offered to buy fresh salad stock from the company to augment its regular supply during an upcoming international for The restaurant association wants to buy 3,000 bags during the next month for $22 per bag. Delivery to restaurants in the other city will cost the company $0.75 per bag. It can meet most of the order with excess capacity but would sacrifice 200 bags of regular sales to fill this special order. Please assist Full Belly Farm's management by answering the following questions. Required a. Using differential analysis, what is the impact on profits of accepting this special order? Short-term impact on profits from the special order: $ b. Should management consider nonquantitative issues before making a final decision? c. How would the analysis change if the special order were for 3,000 bags per month for the next five years? (Assume there would be no loss of regular sales and consider only quantitative factors.) Monthly long-term impact on profits from the special order: \$