User Account

All Pages

Calculate residual income

Assignment Help Accounting Basics
Reference no: EM131820081

Ashton Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Ashton Corporation requires a 10% minimum return on investment.

The following information is available for the year just ended.

Division Gross
Book Value
of Assets		 Divisional
Operating
Income
Bristol $800,000 $94,660
Darden 749,400 91,650
Gregory 445,000 58,690

(a) Calculate return on investment.(Round ROI to 2 decimal places, e.g. 5.12%.)

Which division performed the best?

(b) Calculate residual income. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

(c) Assume that Ashton's weighted-average cost of capital is 6% and its tax rate is 21%. Calculate economic value added. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Reference no: EM131820081

Questions Cloud

Discuss influence strategy formulation within an mnc : What are the internal and external factors that influence strategy formulation within an MNC
What is the present value of these cash returns : The Swell Computer Company has developed a new line of desktop computers. what is the present value of these cash returns?
Prepare the current liabilities section of the balance sheet : During the month of March, Triple Threat purchased $ 50,000 of merchandise on account. Prepare the current liabilities section of the balance sheet at March 31
Journalizing bond issuance and interest payments : Journalizing bond issuance and interest payments On June 30, Doherty Limited issues 6%, 20-year bonds payable with a face value of $120,000.
Calculate residual income : Calculate residual income, Calculate return on investment, Assume that Ashton's weighted-average cost of capital is 6% and its tax rate is 21%
What is the probability that the taxi at fault was blue : Suppose, though, that under night vision conditions, only 80% of individuals can correctly distinguish between a blue and a green vehicle.
Find the forward price for an agreement to deliver : Find the forward price for an agreement to deliver 100 shares of the stock 6 months from now.
What amounts should appear as interest expenses : What amounts should appear as interest expenses on the quarterly income statements and as liabilities on the quarterly balance sheets during 2009
Selecting one of the cable company customers at random : Consider the chance experiment that consists of selecting one of the cable company customers at random. Find and interpret the following probabilities:

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd