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A multinational established a division in a South American country as a subsidiary corporation, with ...

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A multinational established a division in a South American country as a subsidiary corporation, with ...

A multinational established a division in a South American country as a subsidiary corporation, with an initial investment in total assets of 13 million CU's (the local currency is CU's), which cost the company $3,250,000 Canadian at the time. The company sent an experienced manager to run the division, and gave her a target of 13% required rate of return, promising a bonus if this was met and/or exceeded.

After one year, the subsidiary manager was pleased to report a 20% ROI.

You have been able to determine the following data pertaining to the subsidiary:

∙   Exchange rate at end of year was 8 CU's to 1 Cdn dollar
∙   Operating income was earned evenly throughout the year
∙   The exchange rate changed approximately evenly throughout the year

Required:
a.   Calculate the subsidiary's income in CU's.
b.   Calculate the subsidiary's return on investment in Canadian dollars.
c.   Calculate the subsidiary's residual income in Canadian dollars.

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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ruskin Author

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6 years ago

Good timing, thanks!

Tabitha.davis

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Yesterday

Thank you, thank you, thank you!

Turboturner

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2 hours ago

Thanks

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