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QUESTION 3 (25 MARKS) A) Decentralization is lauded as important to good management. das important to good management. Somehow, it is not without its problems. How do Return on Investment (ROI), Residual Inco Economic Value Added (EVA) affects this issues. turn on Investment (ROI), Residual Income (RI) and (7 marks) B) Eiffel Bhd has two divisions it treats as investment as two divisions it treats as investment centers. The results for the last year were as follows: Division A Division B Sales revenue RM234,000 RM486,000 Income RM23,400 RM72,900 Invested Capital RM117,000 RM243,000 Weighted Average Cost of Capital 11% 11% Required: Compute the following amounts for each division: i. Return on investment, desired return is 11% (4 marks) ii. Residual Income, desired rate of return is 18% (6 marks) iii. Capital turnover, desired rate of return is 25% (4 marks) iv. Sales Margin, desired rate of return is 10% (4 marks) do it yourself QUESTION 3 (25 MARKS) A) Decentralization is lauded as important to good management. das important to good management. Somehow, it is not without its problems. How do Return on Investment (ROI), Residual Inco Economic Value Added (EVA) affects this issues. turn on Investment (ROI), Residual Income (RI) and (7 marks) B) Eiffel Bhd has two divisions it treats as investment as two divisions it treats as investment centers. The results for the last year were as follows: Division A Division B Sales revenue RM234,000 RM486,000 Income RM23,400 RM72,900 Invested Capital RM117,000 RM243,000 Weighted Average Cost of Capital 11% 11% Required: Compute the following amounts for each division: i. Return on investment, desired return is 11% (4 marks) ii. Residual Income, desired rate of return is 18% (6 marks) iii. Capital turnover, desired rate of return is 25% (4 marks) iv. Sales Margin, desired rate of return is 10% (4 marks) do it yourself

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