Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment cente

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Heather Smith Cosmetics Hsc Manufactures A Variety Of Products And Is Organized Into Three Divisions Investment Cente 1 (46.72 KiB) Viewed 44 times

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 year's operations follows. The information includes the value of intangible assets, including research and development, patents, and other innovations that are not included on HSC's 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 after-tax operating income would be as given below: Division Soap products skin lotions Hair products Minimum desired rate of return Cost of capital Intangibles: Operating Average Value of Effect on Income Total Assets Intangibles Income $3,241,500 $59,991,500 $1,491,500 $ 991,500 2,741,500 32,991,500 7.991,500 5,991,500 4.991,500 54,991,500 991,500 691,500 5.000 4.00 Required: 1. Calculate the return on investment (RON) for each division, (Round your answers to 2 decimal places. (i.e. 1234 - 12.34%)) 2. Calculate the residual income (RI) for each division 3. Calculate EVA for each division. Answer is complete but not entirely correct. Soap Products Skin Lotions Hair Products 5.40% 8.31 % 9.00 5 241.925 $ 1.091.925 $2,241,925 $ 361,8603 $ 1.421,8403 $ 2,791,840 1 2. Return on investment (ROI) Residual income (RI) EVA 3