Question : 81.Evaluating segments based the segment’s return investment will A.encourage each segment’s : 1302900

81.Evaluating segments based on the segment’s return on investment will

A.encourage each segment’s manager to select only projects that are above the company’s current return on investment.

B.encourage each segment’s manager to only select projects that are above the individual segment’s current return on investment.

C.encourage each segment’s manager to select only projects belowthe company’s required rate of return.

D.encourage managers to select only projects belowthe segment’s cost of capital.

82.Economic value added is

A.essentially the same as residual income except that adjustments are made to liabilities and assets to eliminate “accounting distortions” caused byinterest expense.

B.essentially the same as residual income except that adjustments are made to income and assets to eliminate “accounting distortions” that arise from following generally accepted accounting principles.

C.the use of qualitativeand quantitative measures to evaluate performance.

D.essentially the same as residual income except that adjustments are made to income and assets to eliminate “accounting distortions” caused bynoninterest-bearing current liabilities.

83.Economic value added is residual income adjusted for

A.noninterest-bearingcurrent liabilities.

B.interest and the related tax effect.

C.financing costs that the manager is unable to control.

D.accounting distortions.

84.The following data pertains to the Retail Division of Motor Express:

Sales$700,000

Invested capital200,000

Net operating profit after taxes49,000

Noninterest-bearing current liabilities20,000

The minimum rate of return specified by Motor Express is 12 percent and the cost of capital is 8 percent. How much is residual income?

A.$33,000

B.$25,000

C.$27,400

D.$34,600

85.The Produce Division of Saveway Shop had invested capital of $520,000 last year with $20,000 of noninterest-bearing current liabilities. If the minimum required rate of return is 9 percent, the cost of capital is 7 percent, and last year’s residual income was $52,000, how much was last year’s NOPAT?

A.$98,800

B.$15,600

C.$88,400

D.$5,200

86.The Global Division of Station Depothasinvested capital of $920,000.If residual income is$4,600 and net operating profit after taxes is$69,000, how much isthe cost of capital?

A.7.00%

B.6.67%

C.7.50%

D.8.00%

87.DoralDivision of Resorts International reported net operating profit after taxes totaling$120,000 in 2014.The cost of capital is 10.5 percent and the invested capitalis$560,000. R&D incurred in 2014was $100,000. The company’s policy is to amortize intangible assets over 4years. The income tax rate is 30 percent. How much is the company’s economic value added for 2014?

A.$105,825

B.$825

C.$70,825

D.$75,825

88.Marine Division of SandoCompany reported net operating profit after taxes of $27,000 in 2014.The cost of capital was 14 percent and the invested capital was $150,000. Current year R&D expense is $80,000. If R&D had been capitalized, amortization would have been $20,000 for 2014. The income tax rate is 30 percent. How much is adjusted NOPAT to be used in calculating EVA for 2014?

A.$45,000

B.$41,000

C.($15,000)

D.$69,000

89.Global Division of Food National Distribution’s economic value added for 2014was $1,600.The company’s cost of capital for the year was 16 percent and the company’s adjusted net operating profit after taxes (NOPAT) was $3,500.How much is the amount of the Global Division’s invested capital after adjustment for accounting distortions when calculating EVA?

A.$31,875

B.$21,875

C.$11,875

D.$41,875

90.The following data pertains to the ElectronicsDivision of the Maxwell & Ashley Company:

Sales$1,000,000

Invested capital$700,000

Noninterest-bearingcurrent liabilities$80,000

Net operating profit after taxes$82,000

Minimum required rate of return9%

Cost of capital 7%

How much is residual incomefor the Electronics Division?

A.$19,000

B.$33,000

C.$26,200

D.$38,600