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Use the following to answer questions 5&6. The management of Alpha Division of Allied Paper Company is considering acquiring the Box Manufacturing Company that reported

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Use the following to answer questions 5&6. The management of Alpha Division of Allied Paper Company is considering acquiring the Box Manufacturing Company that reported the following results from the past year. Shareholders of Allied Paper Company require a return of 7%. Alpha Division currently has a Return on Investment (ROI) of 20%, Management calculated a weighted-average cost of capital (WACC) of 5%. Allied's corporate tax rate is 30%. What is the Box Manufacturing Company's ROI and would Alpha Division's management invest in Box Manufacturing Company if management is evaluated on ROI? A) 25.00% and invest B) 40.00% and invest C) 11.67% and not invest D) 11.67% and invest What is the division's Residual Income (RI) and would Alpha Division invest in Box Manufacturing Company if Alpha Division's management is evaluated on RI? A) $77,500 and invest. B) 70,000 and not invest C) $70,000 and invest D) $100,000 and invest

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