The second part of the project involves the analysis of a case study. Each group will be given a different scenario to analyze. Your group must analyze the case you have been presented and in a $1-2$ page written report answering the $5$ questions posed in the scenario.

Please note $-$ each scenario asks different questions, be sure to read your group's questions carefully. Please keep your answers to each question brief and concise. Be sure to back up your answers with evidence from the documents provided in the scenario.

Scenario H

Mr$.$ Jain is the General Manager of VWX Canada Limited which is a subsidiary of a large multinational firm that is traded on a major stock exchange.

The parent company has responsivity for all capital expenditure decisions of the subsidiary, and can dictate if the subsidiary must discontinue operations in a market segment and sell the associated assets used in this segment.

During $2019$ the parent company told the subsidiary that it must discontinue product XYZ and late in $2019$ VWX discontinued the production and sales of product XYZ$.$ Specific assets held for disposition and not used in $2020$ total have gross value of $$55,556.$

All entities are evaluated on the return on the assets invested and the required return must be at least $10\%$ in order to earn annual bonuses which are scaled up as the ROI increases above the $10\%$ required return.

For purposes of ROI, fixed assets are valued at gross value and not net value.

On the next pages you see condensed summary financial statements for VWX for the year ended December $31,2020$ and a proposed capital expenditure.

$1.$ Comment on the appropriate return on investment calculation for Mr$.$ Jain and calculate the amount to $1$ decimal place.

$2.$ Comment on the appropriate return on investment calculation for VWX Limited and calculate the amount to $1$ decimal place.

$3.$ Comment on the appropriate return on investment calculation for the large multinational firm and calculate the amount to $1$ decimal place.

$4.$ Would Mr$.$ Jain be motivated to make the capital investment at the present time? BRIEFLY justify your answer

$5.$ Do you think the bonus system suits the shareholders best interests? BRIEFLY justify your answer.

Financial Statements

VWX Canada Limited

Balance Sheet as at December $31,2020$

Current assets $$48,000$

Non$-$current assets $112,000$

Total assets $$160,000$

Current liabilities $$27,200$

Long term debt $80,000$

Equity $52,800$

Total liabilities and equity $$160,000$

Idle Assets $$55,556$

Required return from operations based on total $10\%$ gross assets