company with two divisions, A and B. Both divisions have the same cost of capital, 10%....
company with two divisions, A and B. Both divisions have the same cost of capital, 10%. Division A is larger than Division B. The EVAs of the two divisions are calculated as follows:
|
Division A |
Division B |
|
|
Net Operating Profit After Tax (NOPAT) |
$150 |
$50 |
|
Total Invested Capital (TIC) |
$1,000 |
$250 |
Which division creates more value
Homework Answers
Add Answer to:
company with two divisions, A and B. Both divisions have the
same cost of capital, 10%....
Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains...
Washington Company has two divisions: the Adams Division and the
Jefferson Division. The following information pertains to last
year's results:
Adams Division Jefferson Division
Net (after-tax) income $611,050 $359,100
Total capital employed 4,720,000 3,672,500
Washington's actual cost of capital was 11%.
Required:
1. Calculate the EVA for the Adams Division. If required, enter
a negative EVA as a negative number by entering your answer with
the minus sign.
$
2. Calculate the EVA for the Jefferson Division. If required,
enter...
The American Battery Company has two divisions, the Electrical Division and the Assembly Division. Both divisions...
The American Battery Company has two divisions, the Electrical Division and the Assembly Division. Both divisions have the full authority to make purchasing and selling decisions of their division output to both outsiders and the other division. (A highly decentralized structure) Each Division operates as a separate profit center and is being evaluated on the basis of the divisionʹs reported profit. The Electrical Division makes the battery cores (inside components) of the battery, and the Assembly Division places those cores...
. Baxter Bros. is a manufacturing company that has two major divisions. Both divisions have requi...
. Baxter Bros. is a manufacturing company that has two major divisions. Both divisions have required a significant investment, and management wants to compare their performance. Below is information related to the two divisions. Division A Division B $30,000 $40,000 $25,000 $35,000 Asset investment $100,000 $100,000 Sales Expenses Management is confused that the ROl seems to be the same for both divisions, and wants a deeper evaluation Which division generates greater profitability per sales dollar?
. Baxter Bros. is a...
Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division...
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 as follows. The company’s weighted-average cost of capital is 11 percent. Division A Division B Total assets $ 6,100,000 $ 8,650,000 Current liabilities $ 550,000 $ 1,800,000 After-tax operating income $ 1,020,000 $ 1,163,000 ROI 24 % 14 % a. Which division is more profitable in absolute dollars? b. Compute the EVA...
Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility...
Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below: (Same data as previous question but different question.) Ur Babylon Fixed assets, gross 2,500 Babaylon Fixed aassets, gross 4,000 Ur Accumulated depreciation Ur - 1,500 Babylon Accum Deprec 1,200 Ur Other assets 500 Babylon Other assets 750 Ur Liabiities 500 Babylon Liabilities 1,000 Ur Sales...
You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two...
You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: CellT Corp. and Talk2Me Inc. The corporate tax rate for both firms is 35%. Your associate analyst has calculated and compiled, in the following table, a list of important figures you'll probably need for the analysis: Data Collected CellT Corp. EBIT $107,500 Depreciation $43,000 Total operating capital $632,100 Net investment in operating capital $301,000 WACC 8.84% Talk2Me Inc. $76,540 $30,616 $493,210 $159,100 11.50%...
Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility...
Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below: Ur Babylon Fixed assets, gross 2,500 4,000 Accumulated depreciation 1,500 1,200 Other assets 500 750 Liabiities 500 1,000 Sales 6,750 7,200 Net Income after tax 743 1,008 Average age of fixed assets 15 5 MMI's weighted average cost of capital (WACC) is 11.5%....
Sapsora Company uses ROI to measure the performance of its operating divisions and to reward division...
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 as follows. The company’s weighted-average cost of capital is 10 percent. Compute the EVA for Division A and Division B. Division A Division B Total assets $ 6,140,000 $ 8,610,000 Current liabilities $ 600,000 $ 1,800,000 After-tax operating income $ 1,040,000 $ 1,167,000 ROI 24 % 13 %
Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for...
Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows: Revenues Operating expenses Support department allocations Invested assets Division A $190,000 112,500 29,500 225,000 Division B $125,500 92,750 12,625 99,000 a. Prepare condensed income statements for the past year for each division Bentz Co. Divisional Income Statements For the Year Ended December 31 Division A Division B Operating income b. Using the DuPont...
Axel Corporation (which has a weighted-average cost of capital of 12%) has two divisions with the...
Axel Corporation (which has a weighted-average cost of capital of 12%) has two divisions with the following information: Beta Division Cal Division Total Assets $720,000 $550,000 Current Liabilities $220,000 $110,000 After-Tax Operating Income $105,000 $110,000 ROI 15% 20% Each manager is offered an investment project opportunity that would increase each division's investment base by $10,000 and generate an additional profit for each division of $1,800. Which of the following is true? Multiple Choice If the managers are evaluated based on...
Washington Company has two divisions: the Adams Division and the
Jefferson Division. The following information pertains to last
year's results:
Adams Division Jefferson Division
Net (after-tax) income $611,050 $359,100
Total capital employed 4,720,000 3,672,500
Washington's actual cost of capital was 11%.
Required:
1. Calculate the EVA for the Adams Division. If required, enter
a negative EVA as a negative number by entering your answer with
the minus sign.
$
2. Calculate the EVA for the Jefferson Division. If required,
enter...
. Baxter Bros. is a manufacturing company that has two major divisions. Both divisions have required a significant investment, and management wants to compare their performance. Below is information related to the two divisions. Division A Division B $30,000 $40,000 $25,000 $35,000 Asset investment $100,000 $100,000 Sales Expenses Management is confused that the ROl seems to be the same for both divisions, and wants a deeper evaluation Which division generates greater profitability per sales dollar?
. Baxter Bros. is a...
You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: CellT Corp. and Talk2Me Inc. The corporate tax rate for both firms is 35%. Your associate analyst has calculated and compiled, in the following table, a list of important figures you'll probably need for the analysis: Data Collected CellT Corp. EBIT $107,500 Depreciation $43,000 Total operating capital $632,100 Net investment in operating capital $301,000 WACC 8.84% Talk2Me Inc. $76,540 $30,616 $493,210 $159,100 11.50%...
Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows: Revenues Operating expenses Support department allocations Invested assets Division A $190,000 112,500 29,500 225,000 Division B $125,500 92,750 12,625 99,000 a. Prepare condensed income statements for the past year for each division Bentz Co. Divisional Income Statements For the Year Ended December 31 Division A Division B Operating income b. Using the DuPont...
Most questions answered within 3 hours.
-
Computer Programming II CS141(Java)
Mention the appropriate relationship between following
classes:
HOD–StaffMember
Car–Ferrari
Student-Address
BankAccount–FixedAccount
House-Building...
asked 1 hour ago -
Assume one of your finals has 50 questions on it, and
lucky for you, it's all...
asked 3 hours ago -
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 4 hours ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 4 hours ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 5 hours ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 5 hours ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 5 hours ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 6 hours ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 9 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 10 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 10 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 10 hours ago