Calculate the residual income for the truman division

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Question - The Truman Division of Wordsworth, Inc. reported the following results.

Sales 40,000,000

Expenses 30,000,000

Average Assets 80,000,000

Compute the following:

1) Margin

2) Turnover

3) ROI

Truman's management requires a minimum acceptable rate of return of: 10%

4) Calculate the residual income for the Truman Division.

Wordsworth evaluates its divisions based on economic value added.

Wordsworth's tax rate is: 22.50%

Wordsworth's cost of capital is: 8.25%

5) Calculate the EVA for the Truman Division.

Reference no: EM133069737

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