Reference no: EM133179081

Question 1 - Handley Mills is a division of Iowa Woolen Products. For the most recent year, Handley had net income of $22,400,000. Included in the income was an interest expense of $1,708,000. The operation's tax rate is 15 percent. Total assets of Handley Mills are $286,700,000, current liabilities are $63,440,000, and $43,920,000 of the current liabilities are noninterest bearing. Calculate NOPAT, invested capital, and ROI for Handley Mills.

Question 2 - Paver Hospital is a division of Superior Healthcare that is organized as an investment center. In the past year, the hospital reported an after-tax income of $3,080,000. The total interest expense was $1,452,000, and the hospital's tax rate was 20 percent. Hospital assets totaled $30,800,000, and noninterest-bearing current liabilities were $10,032,000. Superior has established a required rate of return equal to 18 percent of invested capital. Calculate the residual income/EVA of Paver Hospital.