The following data are available for two divisions of Solomons Company:

	North Division			South Division
Division operating profit	$	6,000,000		$	40,000,000
Division investment		30,000,000			320,000,000

The cost of capital for the company is 8 percent. Ignore taxes.

Required:

a-1. Calculate the ROI for both North and South divisions. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

Divisions	ROI (%)
North
South

a-2. If Solomons measures performance using ROI, which division had the better performance?

North or South?

b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)

Divisions	EVA
North
South

b-2. If Solomons measures performance using economic value added, which division had the better performance?

North or South?

c. Would your evaluation change if the companys cost of capital were 16 percent?

1. When evaluated by ROI?

Yes or No?

2. When evaluated by EVA?

Yes or No?