ROI versus EVA Measures Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The company's weighted-average cost of capital is 12 percent. 11eb742a_6ce7_c8cc_a720_817e44d39b60_SM1621_00 a. Which division is more profitable? b. Would EVA more clearly show the relative contribution of the two divisions to the company as a whole? Show the computations. c. Suppose the manager of Division A was offered a one-year project that would increase his investment base by $250,000 and show a profit of $37,500. Would the manager choose to invest in the new project?

Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

النسخة 17الرقم المعياري الدولي: 978-0078025778

Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

النسخة 17الرقم المعياري الدولي: 978-0078025778

تمرين 6

ROI versus EVA Measures
Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The company's weighted-average cost of capital is 12 percent.

a. Which division is more profitable?
b. Would EVA more clearly show the relative contribution of the two divisions to the company as a whole? Show the computations.
c. Suppose the manager of Division A was offered a one-year project that would increase his investment base by $250,000 and show a profit of $37,500. Would the manager choose to invest in the new project?

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Return on Investment (ROI): Return on in...