CHARITY AND SPONSOR ADS
Shopping Cart
0 items
 

Problem 12-7 ROI and EVA

Problem 12-7 ROI and EVA
Click to enlarge
Price: $4.99
Availability: In Stock
Model: A
Average Rating: 5 out of 5 Stars!

INSTANT DOWNLOAD

Solution Guide / Answer Key:

ACCOUNTING

MT425 / MT 425
Managerial Finance and Accounting
Kaplan University (KU Campus)

James Jiambalvo
Managerial Accounting, 4e
Hoboken, NJ: John Wiley & Sons.

Unit 9: Decentralization and Performance Evaluation

Chapter 12 Problem 12-7 ROI and EVA [LO 6] ELN Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of residential garbage. Information related to the two subsidiaries follows.

Hazardous Waste Residential Waste
Total assets $13,000,000 $70,000,000
Noninterest-bearing current liabilities 3,000,000 12,000,000
Net income 1,700,000 6,000,000
Interest expense 1,250,000 7,300,000
Required rate of return 12% 14%
Tax rate 40% 40%

Required
a. Calculate ROI for both subsidiaries.
b. Calculate EVA for both subsidiaries. Note that since no adjustments for accounting distortions are being made, EVA is equivalent to residual income.
c. Which subsidiary has added the most to shareholder value in the last year?
d. Based on the limited information, which subsidiary is the best candidate for expansion? Explain.

 

FILE: MS WORD

Write Review
Your Name:


Your Review: Note: HTML is not translated!

Rating: Bad            Good

Enter the code in the box below:

There are no additional images for this product.