The Seaside Corporation manufactures similar products in the South Africa and Norway. The SA and Norwegian operations are organised as decentralised divisions. The following information is available for 2012; ROI is calculated as operating income divided by total assets:

South Africa Norwegian Division

Operating income ? 6 840 000 Kroner

Total assets R7 500 000 72 000 000 Kroner

ROI 9.3% ?

Both investments were made on 31 December 2018. The exchange rate at the time of Seasides investment in Norway on 31 December 2018 was 9 Kroner = R1. During 2019, the Norwegian Kroner decreased steadily in value so that the exchange rate on 31 December 2019 is 10 Kroner = R1. The average exchange rate during 2019 is [(9 + 10) / 2] = 9.5 Kroner = R1.

Required:

1.1 Calculate the SA divisions operating income for 2019.

1.2 Calculate the Norwegian divisions ROI for 2019 in Kroner.

1.3 Top management wants to know which division earned a better ROI in 2019. What would you tell them?

1.4 Which division do you think had the better RI performance? Explain your answer. The required rate of return on the investment (calculated in SA Rands) is 8%.