91.The Produce Division of Nature Greenhasinvested capital of $940,000 and noninterest-bearing current liabilities totaling $20,000.If the minimum required return is 11 percent, cost of capital is 9 percent, and residual income is$12,000, how much isNOPAT?
A.$113,200
B.$115,400
C.$94,800
D.$96,600
92.Consider the following information for the Executive Division of Buy Electronics:
December 31
20142013
Total assets$11,800,000$11,000,000
Noninterest-bearing current liabilities500,000520,000
Net income700,000800,000
Interest expense210,000300,000
Income tax rate35%35%
Cost of capital7%8%
Required rate of return9%11%
How much is residual income for 2014?
A.$45,500
B.($180,500)
C.$119,000
D.($227,500)
93.The following income statements for the year ending December 31 and other information are available for the Langston Division of Act Company:
For the Year Ending December 31
20142013
Sales$250,000,000$220,000,000
Cost of goods sold105,000,00096,000,000
Gross margin145,000,000124,000,000
Selling and administrative costs25,000,00022,500,000
Research and development15,600,00012,400,000
Income from operations104,400,00089,100,000
Less taxes on income31,320,00026,730,000
Net income$ 73,080,000$ 62,370,000
Total assets$650,000,000$605,000,000
Noninterest-bearing current liabilities$15,000,000$12,300,000
Required rate of return12%12%
Cost of capital10%10%
Interest expense is $0 and the tax rate is 30 percent. Langston Divisionamortizes intangible costs over 4 years. By how much is invested capital adjusted as it relates to computing EVAfor 2014?
A.$17,900,000
B.$11,700,000
C.$6,020,000
D.$8,600,000
94.The following income statements for the year ending December 31 and other information are available for the Langston Division of Act Company:
For the Year Ending December 31
20142013
Sales$250,000,000$220,000,000
Cost of goods sold105,000,000 96,000,000
Gross margin145,000,000124,000,000
Selling and administrative costs25,000,00022,500,000
Research and development 15,600,000 12,400,000
Income from operations104,400,00089,100,000
Less taxes on income 31,320,000 26,730,000
Net income$ 73,080,000$ 62,370,000
Total assets$650,000,000$605,000,000
Noninterest-bearing current liabilities$15,000,000$12,300,000
Required rate of return12%12%
Cost of capital10%10%
Interest expense is $0 and the tax rate is 30 percent. Langston Division amortizes intangible costs over 4 years. By how much is NOPAT adjusted as it relates to computing EVA for 2014?
A.$8,190,000
B.$11,700,000
C.$8,600,000
D.$6,020,000
95.Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper. Information related to the two subsidiaries follows.
Yard RecyclingPaper Recycling
Total assets$8,000,000$15,000,000
Noninterest-bearing current liabilities 500,0001,000,000
Net income1,500,0002,600,000
Interest expense600,000800,000
Required rate of return8%11%
Cost of capital7%9%
Tax rate30%32%
How much is the return on investment for the Paper Recycling Division?
A.19.65%
B.20.40%
C.22.46%
D.14.69%
96.Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper. Information related to the two subsidiaries follows.
Yard RecyclingPaper Recycling
Total assets$8,000,000$15,000,000
Noninterest-bearing current liabilities 500,0001,000,000
Net income1,500,0002,600,000
Interest expense600,000800,000
Required rate of return8%11%
Cost of capital7%9%
Income tax rate30%32%
Which subsidiary has added the most to shareholder value in the last year?
A.Yard recycling, because it has a higher return on investment
B.Paper recycling, because it has a higher residual income
C.Both contributed equally in different ways
D.More information is needed to determine the answer
97.Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper. Information related to the two subsidiaries follows.
Yard RecyclingPaper Recycling
Total assets$8,000,000$15,000,000
Noninterest-bearing current liabilities 500,0001,000,000
Net income1,500,0002,600,000
Interest expense600,000800,000
Required rate of return8%11%
Cost of capital7%9%
Tax rate30%32%
Based on the limited information, which subsidiary is the best candidate for expansion?
A.Yard recycling, because it has a higher return on investment
B.Paper recycling, because it has a higher residual income
C.Both contributed equally in different ways
D.More information is needed to determine the answer
98.Which dimension of a balanced scorecardis ameasure of the increase in employee training?
A.Learning and growth dimension
B.Internal processes dimension
C.The customer dimension
D.The financial dimension
99.In which dimension of a balanced scorecard is themeasure of the number of new patents developed through research and development?
A.Learning and growth dimension
B.Internal processes dimension
C.The customer dimension
D.The financial dimension
100.Which of the following is notone of the set of dimensions considered in the balanced scorecard?
A.Customer
B.Internal processes
C.Competition
D.Learning and growth
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