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Compare the two divisions in terms of return on investment

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Consider the following data, which relate to the two divisions of McIntyre Products:

                                                           Division 1                Division 2

Total assets                                          $69,000,000          $23,000,000

Noninterest-bearing current liabilities           4,500,000             2,300,000

NOPAT                                                   12,000,000          5,900,000

Required rate of return                                   11%                   10%

REQUIRED

Question 1: Compare the two divisions in terms of return on investment and residual income. In the past year, which division has created the most wealth for McIntyre shareholders?

Reference no: EM132595489

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