Compute the return on investment for each division

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Reference no: EM13902885

ROI and economic value added. The Bella Vista Woodwork Company uses return on investment and economic value added as performance evaluation measures for its division managers. The company's weighted-average cost of capital is 10 percent. Assume a tax rate of 20 percent. Financial data for the company's three divisions follow. (All foreign cur- rencies have been converted to U.S. dollars.)

	U.S. Division	Asia Division	Europe Division
Sales	$300,000	$375,000	$450,000
Operating	25,500	28,000	29,500
Assets	150,000	125,000	175,000
Current Liabilities	10,000	5,000	15,000

a. Compute the return on investment for each division.

b. Compute the economic value added amount for each division.

c. Which division's manager is performing the best using ROI? Which division's manager is performing the best using economic value added? Explain your results.

Reference no: EM13902885

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