Ashton Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Ashton Corporation requires a 10% minimum return on investment. The following information is available for the year just ended.

Division    Gross Book Value of Assets   Divisional Operating Income

Bristol         $800,000                                             $94,980

Darden           745,700                                                91,050

Gregory           441,000                                               57,500

(a) Calculate return on investment. (Round ROI to 2 decimal places, e.g. 5.12%.) Return on Investment Bristol % Darden % Gregory % Which division performed the best? DardenGregoryBristol

(b) Calculate residual income. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Residual Income

Bristol $

Darden $

Gregory $

Which division performed the best? Gregory,Bristol, Darden

(c) Assume that Ashton’s weighted-average cost of capital is 6% and its tax rate is 24%. Calculate economic value added. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Economic Value Added

Bristol $

Darden $

Gregory $

Which division performed the best? Gregory, Bristol, Darden.