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The Husky Company has two divisions that work independently as investment centres. Relevant information is as follows: a) Calculate the ROI for each division. (3
The Husky Company has two divisions that work independently as investment centres. Relevant information is as follows: a) Calculate the ROI for each division. (3 points) b) Calculate the RI for each division assuming a desired return on assets of 11%. (3 points) c) Calculate the EVA for each division assuming a tax rate of 25% and a WACC of 8%. ( 6 points) d) Husky is debating about offering a new bonus system to its division managers. It has been proposed that the managers receive either 2% of the residual income of their division or $1,000 for each percentage point division ROI is above 11%. As the manager of Pacific Division, which bonus plan would you prefer? Why? ( 6 points)
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