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Compute and analyze the residual income

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Question - The following summary information is available regarding CPL Plc.

CPL plc. Profit Plan For the year ending DEC. 31, 2019

Sales Revenue $42,000,000

Net Income $6,000,000

Total Assets $30,000,000

Operating Assets $9,000,000

Total Liabilities $9,000,000

WACC 22%

Tax Rate 30%

Return from project A $375,000

Cost of project A $325,000

Required - Compute and analyze the:

1. Return on Investment (ROI) for project A

2. Return on Equity (ROE) and its components for the company.

3. Residual income (RI)

 

Reference no: EM132621818

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