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The following information was compiled by the company's accountant for one of the company's divisions for the last quarter: Division XXX $3,650,000 $270,000 $2,450,000
The following information was compiled by the company's accountant for one of the company's divisions for the last quarter: Division XXX $3,650,000 $270,000 $2,450,000 $350,000 Sales Operating income Total assets Current liabilities Target rate of return WACC Tax rate Required (Show all computations): 1. Compute the following performance measures: ROI, RI, and EVA. (14 marks) 2. Assume that the division manager is considering an investment opportunity that would yield $35.000 in annual operating income and cost the division $240.000. Is this a good investment opportunity from the perspective of top management? Why or why not? (5 marks) 14% 12% 30%
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