Heather Smith Cosmetics HSC manufactures a variety of products and is organized into three divisions investment centers: soap products, skin lotions, and hair products. Information about the most recent years operations follows. The information includes the value of intangible assets, including research and development, patents, and other innovations that are not included on HSCs balance sheet. Were these intangibles to be included in the financial statements as they are for EVA the increase in the balance sheet and the increase in aftertax operating income would be as given below:
Division Operating Income Average Total Assets Value of Intangibles Intangibles Effect on Income
Soap products $ $ $ $
Skin lotions
Hair products
Minimum desired rate of return
Cost of capital
Required:
Calculate the return on investment ROI for each division. Round your answers to decimal places. ie
Calculate the residual income RI for each division.
Calculate EVA for each division.
