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The Lowiees parent company provides the following information regarding two subsidiaries: A SUB B SUB Net sales for year $4,000,000 $7,000,000 Average total assets for

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The Lowiees parent company provides the following information regarding two subsidiaries: A SUB B SUB Net sales for year $4,000,000 $7,000,000 Average total assets for year $2,000,000 $2,000,000 Operating income before taxes $360,000 $420,000 Tax rate 20% 20% Average aftertax cost of capital 10% 12% REQUIRED: A) Compute the ROI for each subsidiary. Income is defined as operating income after taxes. B) Based on the ROI, which subsidiary president should receive a bonus? Bonuses are awarded if ROI equals or exceeds 15 percent. C) Compute the residual income for each subsidiary. For invested capital, use the Average Total Assets provided in the problem. D) Based on the residual income, which subsidiary president should receive a bonus? Bonuses are awarded if residual income is greater than $100,000

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