,

Zorah a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year (in thousands of dollars):

		Operating	Total	Current
	Sales	Income	Assets	Liabilities
Residential	$560,000	$66,330	$198,000	$63,000
Professional	1,100,000	169,290	418,000	145,000

Management has a

2424 %

target rate of return for each division.

Zorah'sZorah's

weighted average cost of capital is

1515 %

and its effective tax rate is

2727 %.

Requirements

1. Calculate each division's RI. Interpret your results.

2. Calculate each division's EVA. Interpret your results.

3. Describe the conceptual and computational similarities and differences between RI and EVA.