Reference no: EM132577351
Surf Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures.
The following information is provided for 20X5:
ASSETS INCOME
Book value Current value Book value Current value
Bleach $225,000 $300,000 $150,000 $155,000
Cleanser $450,000 $250,000 $100,000 $105,000
The company is currently using a 15% required rate of return.
Question a) What are Bleach's and Cleanser's return on investment based on book values, respectively?
Question b) What are Bleach's and Cleanser's return on investment based on current values, respectively?
Question c) What are Bleach's and Cleanser's residual incomes based on book values, respectively?