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