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What is brando division return on investment

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Reference no: EM132556425

Assume the Brando Division of MH Enterprises, Inc. had the following results this past year (expressed in thousands). The company's management has a required rate of return of 10% and MH Enterprises' weighted average cost of capital is 8%.. Mh Enterprises' effective tax rate is 30%.

Sales                           $3,000,000

Operating income             $500,000

Total assets                    $4,500,000

Current liabilities                  $300,000

Question a) What is Brando Division's return on investment? Be sure to show work!

Question b) What is Brando Division's residual income? Be sure to show work!

Question c) Which is a better measure (ROI or residual income) to evaluate a Division's performance. (research the advantages and disadvantages of ROI vs Residual Income.

Reference no: EM132556425

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