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Compute the return on investment

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Question - Mary's Auto Shop Inc. allows its divisions to operate as autonomous units. Their results for the current year were as follows:

Sport Terrain City

Revenues $1,700,000 $800,000 $6,000,000

Current assets 230,000 40,000 410,000

Capital assets 870,000 660,000 1,590,000

Current liabilities 100,000 100,000 500,000

Net operating income 232,000 42,000 602,000

After-tax income 186,000 34,000 482,000

Weighted average cost of capital 10% 10% 10%

Required - For each division compute (to two decimal) the:

1. Return on sales in %

2. Return on investment (to two decimal) based on total assets employed in %

3. Economic value added

4. Residual income based on net operating income

 

Reference no: EM132663982

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