Taif $4,200,000 1,650,000 1,680,000 Fixed costs 1,230,000 1,320,000 1,400,000 Interest costs on long-term 368,000 debt at 8% PART C (25 points) Red Star Restaurants Chain owns and operates a variety of casual dining restaurants in division Al-Madinah, and Makkah. Each geographical market is considered a separate division The Taif division includes four restaurants, each built in early 2003. The Madinah division consists of three restaurants, each built in 2009. The Makkah division is the newest, consisting of three restaurants built 5 years ago and mostly operate as takeaway units. In the past, division managers were evaluated on the basis of ROI and then residual income (RI). The CEO is concerned that the focus on annual ROI could have an adverse long-run effect on the branches and the group's performance, in particular, it might cause managers to ignore emerging threats and opportunities The Group's management accountant recently has suggested to top management that the economic value added (EVA) approach might be a viable alternative for evaluating the performance of divisions. All divisions are assumed to face similar risks. Data for 2021follow Revenues Variable costs Operating income Al-Madinah Makkah $4,580,000 $3,330,000 Total $12,110,000 1,005,000 4,335,000 1,500,000 930,000 3,660,000 1,395,000 4,115,000 416,000 440,000 1,224,000 Income before income taxes 952,000 984,000 955,000 2,891,000 (30%) Net income after taxi $666,400 $ 688,800 $668,500 $2,023,700 Net book value at 2019 year-end: Current assets $1,330,000 $900,000 $650,000 $2,880,000 Long-term assets 4,925,000 5,512,000 6,885,000 17,322,000 Total assets 6,255,000 6.412,000 7,535,000 20,202,000 Current liabilities $380,000 $315,000 $134,000 $ 829,000 Long-term debt 4,650,000 5,250,000 5,550,000 Stockholders' equity 1,225,000 847,000 1,851,000 Total liabilities and 6,255,000 6,412,000 7,535,000 15,450,000 3,923,000 20,202,000 stockholders' equity Market value of debt $4,750,000 $5,350,000 $5,800,000 $15,900.000 Market value of equity 2,500,000 2,750,000 2,650,000 7,900,000 Cost of equity capital 12% Required rate of return 10% Accumulated depreciation on long-term assets $2,200,000 $1,510,000 $220,000 Required: 1. Use the DuPont method of profitability analysis to evaluate the performance of the three Red divisions for the year 2020. Use the 2020 net book value of total assets as the investment be Show your calculations and comment on the results. (4 8