The Campus Division of All-States Bank has assets of $1,800 million. During the past year, the division had profits of 5 States Bank has a cost of capital of 4 percent. Ignore taxes.
The Campus Division of All-States Bank has assets of $1,800 million. During the past year, the division had profits of 5 States Bank has a cost of capital of 4 percent. Ignore taxes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A. Compute the divisional ROI for the Campus Division.
B. Compute the divisional RI for the Campus Division.
Transcribed Image Text:**The Campus Division of All-States Bank: Financial Calculation Task**
The Campus Division of All-States Bank has assets of $1,800 million. During the past year, the division had profits of $225 million. All-States Bank has a cost of capital of 4 percent. Taxes are ignored for the purpose of this task.
**Required:**
a. **Compute the Divisional ROI (Return on Investment) for the Campus Division.**
- Enter your answer as a percentage rounded to one decimal place (i.e., 32.1).
- Input field provided for "Divisional ROI" with a percentage sign (%).
b. **Compute the Divisional RI (Residual Income) for the Campus Division.**
- Enter your answer in dollars, not in millions.
- Input field provided for "Divisional RI."
No graphs or diagrams are included within this task.
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