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You are the divisional manager of Elerai Engineering Ltd . Your performance as a divisional manager is evaluated primarily on one measure; after - tax
You are the divisional manager of Elerai Engineering Ltd Your performance as a divisional manager is evaluated primarily on one measure; aftertax divisional segment profits less the cost of capital invested in divisional assets. The projections for the existing operations in your division are as follows: TZS Sales Expenses Segment profit before tax Taxes Segment profit aftertax The value of invested capital of the division is TZS the required return on capital is You are now evaluating an investment in a new product line that would, according to projections, increase pretax segment profits by TZS The cost of the investment has not yet been determined. REQURED: Disregarding the new investment, what is the projected economic value added EVA for your division in Based on your answer in part a what is the maximum amount that you would be willing to invest in the new product line? Assuming that the new product line would require an investment of TZS what would the revised projected EVA for your division be in if the investment were made. Identify and discuss THREE weakness of using return on investment ROI and Residual income RI as performance measures. Briefly discuss how the balanced scorecard approach improves the selection of performance measures in organizations.
You are the divisional manager of Elerai Engineering Ltd Your performance as a divisional manager is evaluated primarily on one measure; aftertax divisional segment profits less the cost of capital invested in divisional assets. The projections for the existing operations in your division are as follows:
TZS
Sales
Expenses
Segment profit before tax
Taxes
Segment profit aftertax
The value of invested capital of the division is TZS the required return on capital is You are now evaluating an investment in a new product line that would, according to projections, increase pretax segment profits by TZS The cost of the investment has not yet been determined.
REQURED:
Disregarding the new investment, what is the projected economic value added EVA for your division in
Based on your answer in part a what is the maximum amount that you would be willing to invest in the new product line?
Assuming that the new product line would require an investment of TZS what would the revised projected EVA for your division be in if the investment were made.
Identify and discuss THREE weakness of using return on investment ROI and Residual income RI as performance measures.
Briefly discuss how the balanced scorecard approach improves the selection of performance measures in organizations.
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