Size Corporation provided the following income statement for two of its divisions: Big and Little Segment Income Statement for Size Corporation Big Little Total Revenue $1,000,000 $620,000 $1,620,000 Variable expenses Product 520,000 310,000 830,000 Selling and administrative 80,000 50.000 130.000 Contribution margin 400,000 260,000 660,000 Less traceable fixed costs 60.000 20,000 80,000 Segment margin $340,000 $ 240,000 $580,000 Common fixed costs 270,000 Net operating income $310.000 Net operating income $310,000 Size's tax rate is 40% and the required rate of return is 14%. The Big division balance sheet showed $1,300,000 of assets ($300,000 current and $1,000,000 long-term) and $820,000 of liabilities ($220,000 current and $600,000 long-term). The Little division reported $800,000 of assets ($100,000 current and $700,000 long-term) and $550,000 of liabilities ($400,000 current and $150,000 long- term). Size has the following capital structure: Type of Capital Cost of Capital Percent of Portfolio Debt 12.5% 55% Equity 18% 45% Required: 1. Calculate the economic value added for each division 1. Which of the two managers will be rated higher on performance? Why? FR