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The following data are available for two divisions of Solomons Company. The cost of capital for the company is 6 percent. Ignore taxes. Required: a-1.
The following data are available for two divisions of Solomons Company. The cost of capital for the company is 6 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 15 percent? 1. When evaluated by ROI? 2. When evaluated by EVA? Answer is not complete. Complete this question by entering your answers in the tabs below. Calculate the ROI for both North and South divisions. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).) Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)
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