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Business, 12.04.2021 19:10 kelisedudleybroxxsx9

The following data pertain to two divisions, Western and Eastern, of a large corporation. The corporation was established on the East Coast of the United States. It has recently expanded to the West Coast to take advantage of the greater profit potential in the growing western states. Eastern Western Profit $3,000,000 $780,000 Assets $24,000,000 $3,900,000 Determine the higher ranked division using residual income (each division has a required rate of return [cost of capital] of 10%) as the criterion. Repeat part (a) using ROA as the criterion. How do you explain the conflicting results in parts (a) and (b)

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