The Meikle Division has assets of $600,000, current liabilities of $60,000, and net operating income of $180,000 a What is the divisions ROI b If the weighted average cost of capital is 12 percent, what is the divisions EVA c How might management behavior be different if EVA were used to evaluate p...

a ROI 180000 600000 30 b EVA 180000 12 600000 60000 115200 c ...

The Meikle Division has assets of $600,000, current liabilities of $60,000, and net operating income of $180,000.

Question:

The Meikle Division has assets of $600,000, current liabilities of $60,000, and net operating income of $180,000.
a. What is the division’s ROI?
b. If the weighted-average is 12 percent, what is the division’s EVA?
c. How might management behavior be different if EVA were used to evaluate performance rather than ROI?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...