Question :
Answer the following question(s) using the information below:
Springfield Corporation, whose : 1186239
Answer the following question(s) using the information below:
Springfield Corporation, whose tax rate is 40%, has two sources of funds: long-term debt with a market value of $8,000,000 and an interest rate of 8%, and equity capital with a market value of $12,000,000 and a cost of equity of 12%. Springfield has two operating divisions, the Blue division and the Gold division, with the following financial measures for the current year:
Total Assets
Current Liabilities
Operating Income
Blue Div.
$9,500,000
$2,800,000
$1,055,000
Gold Div.
$11,000,000
$2,200,000
$1,200,000
51) What is Economic Value Added (EVA) for the Blue Division?
A) -$233,400
B) $21,960
C) $188,600
D) $433,960
E) -$63,800
52) What is Economic Value Added (EVA) for the Gold Division?
A) -$283,200
B) -$82,560
C) $196,800
D) $397,440
E) -$195,200
Answer the following question(s) using the information below:
Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million). Coldbrook Company has profit centres in the following locations with the following operating incomes, total assets, and current liabilities. The cost of equity capital is 15%, while the tax rate is 30%.
Operating Income
Assets
Current Liabilities
Bish Bash Falls
$815,000
$3,750,000
$800,000
Brooksville
$1,100,000
$5,000,000
$1,200,000
Stonybrook
$2,450,000
$9,250,000
$3,180,000
53) What is the EVA for Bish Bash Falls?
A) $338,563
B) $305,000
C) $275,500
D) $255,500
E) $220,188
54) What is the EVA for Brooksville?
A) $476,250
B) $428,000
C) $415,525
D) $390,000
E) $318,750
55) What is the EVA for Stonybrook?
A) $1,108,000
B) $1,168,700
C) $1,315,063
D) $1,403,063
E) $994,188
56) Novella Ltd. reported a return on investment of 16%, an asset turnover of 6, and income of $190,000. On the basis of this information, the company’s invested capital was:
A) $1,187,500
B) $7,125,000
C) $1,140,000
D) $197,917
E) $182,400
57) For the period just ended, Trident Ltd. reported profit of $22.6 million and invested capital of $250 million. Assuming an imputed interest rate of 8%, which of the following choices correctly denotes Trident’s return on investment (ROI) and residual income respectively?
A) 8.32%; $20.792 million
B) 9.04%; $20,792 million
C) 9.76%; $4.408 million
D) 9.04%; $2.6 million
E) 9.76%; $2.6 million
58) Which two ratios are used in the DuPont system to create return on assets?
A) Profit margin and asset turnover
B) Asset turnover and return on investment
C) Profit margin and operating leverage
D) Profit margin and return on sales
E) Return on sales and return on assets
59) Miller Medical Services provided the following information for it past year’s operations in its Hospital Bed Division.
Revenues
$2,000,000
Accounts receivable
500,000
Total assets
1,500,000
Operating income
800,000
Taxable income
520,000
What is the Hospital Bed Division’s return on sales if income is defined as operating income ?
A) 0.40
B) 0.53
C) 0.92
D) 1.33
E) 2.50
60) Miller Medical Services provided the following information for its last year’s operations in the Hospital Bed Division.
Revenues
$2,000,000
Accounts receivable
500,000
Total assets
1,500,000
Net operating income
800,000
Taxable income
520,000
What is the Hospital Bed Division’s asset turnover?
A) 0.00
B) 0.53
C) 0.92
D) 1.33
E) 2.50
(or a similar one of your choice), take the WBS elements from your WS created in Module 4, and brainstorm activities required to complete each deliverable. Type the activities into the yellow sticky notes that are included in the PowerPoint.