The following financial statements apply to Vita division, one of three investment centers operated by Nexis Corporation. Nexis Corporation has a desired rate of return of 15%. Nexis Corporation headquarters has N$80 000 of additional operating assets to assign to the investment centers. Vita Division Income Statement for the year ended 30 August 2021 Below is a Balance Sheet of Vita Division as at 31 August 2021 N$ Sales Revenue 78 695 Cost Of Goods Sold (50 810) Gross Margin 27 885 Operating Expenses Selling Expenses (1 200) Depreciation Expenses (1 125) Operating Income 25 560 Non-Operating Expense Loss on sale of Land (3 200) Net Income 22 360 Assets N$ Cash 8 089 Account Receivables 22 870 Merchandise Inventory 33 460 Equipment 77 581 Non Operating Assets 8 250 Total Assets 150 250 Liabilities Account payable 5 000 Notes Payable 58 000 Stock Holder equity Common Stock 55 000 Retained Earnings 32 250 Total Liability & Stock Holder Equity 150 250 REQUIRED: MARKS 1.1 Should Nexis Corporation use operating income or net income to determine its Return On Investment rate for the Vita investment center? Explain 2 1.2 Should Nexis Corporation use operating assets or total assets to determine Return On Investment for the Vita investment center? Explain. 2 1.3 Calculate the ROI for Vita Division. 3 1.4 The manager of the Vita Division has an opportunity to invest the funds at an ROI of 17 percent. The other two divisions have investment opportunities that yield only 16 percent. The manager of Vita Division rejects the additional funding. Why would the manager of Vita Division reject the funds under these circumstances? 4 1.5 Calculate the residual income from the investment opportunity available to Vita Division and explain how residual income could be used to encourage the manager to accept the additional funds 4 1.6 Write a Memo to the Manager of Nexis Corporation and explain to him about the following methods of measuring divisional performance. 1. Return on Investment 2. Residual Income 3. Sales Growth Measure. 4. In your Memo, clearly indicate the objective of measuring divisional performance, talk about the long term and short term performance measure using each method, the advantage and disadvantage of measuring divisional performance using each method, in your 25 conclusion kindly advise the Manager the best method and explain why you deem it fit. NB! Make use of the APA referencing style. Your memo must be typed in Times New Roman font, size 12, double spaced and justified margins. The information in your memo must contain between 500 and 1 000 words. Plagiarizing students will be penalized. TOTAL MARKS 40