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The following data are available for two divisions of Solomons Company. Division operating profit Division investment North Division $ 7,955,000 43,000,000 South Division $ 36,630,000
The following data are available for two divisions of Solomons Company. Division operating profit Division investment North Division $ 7,955,000 43,000,000 South Division $ 36,630,000 333,000,000 The cost of capital for the company is 7 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.) b-2. If Solomons measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company's cost of capital was 16 percent? 1. When evaluated by ROI? 2. When evaluated by EVA? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req B1 Req B2 Req c1 Req c2 Calculate the ROI for both North and South divisions. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) ROI Divisions North South % %
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