A Company, which has income of $11,250 and an invested capital of $75,000, is studying an...
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A Company, which has income of $11,250 and an invested capital of $75,000, is studying an investment opportunity that will cost $35,000 and yield a profit of $3,675. Assuming the company uses an imputed interest rate of 11%, which of the following statements is true? If the division is evaluated on the basis of residual income, the divisional manager would not accept the new investment because it is only good for the company but bad for the division If the division is evaluated on the basis of residual income, the divisional manager would accept the new investment because it is good for the division If the division is evaluated on the basis of ROI, the divisional manager would not accept the new investment because it is only good for the company but bad for the division If the division is evaluated on the basis of ROI, the manager would accept the new investment because it is good for the division Regardless of whether the division is evaluated on the basis of ROI or the residual income, the divisional manager would not accept the new investment because it is bad for the division and the company Consider the following data of B Company: Sales revenue $236,800 Capital turnover 3,20 Return on investment 20.8% Imputed interest rate 10% B Companys residual income: $7,992 None of these $2,736 $11,749 $81,839 C Company had a sales margin of 3%, sales revenue of $160,000, and invested capital of $100,000. The company's ROI was: 3.6% 1.875% 1.6% None of these 4.8% D, Inc. reported a return on investment of 44%, a capital turnover of 5 and invested capital of $45,135. The company's sales revenue was: A Company, which has income of $11,250 and an invested capital of $75,000, is studying an investment opportunity that will cost $35,000 and yield a profit of $3,675. Assuming the company uses an imputed interest rate of 11%, which of the following statements is true? If the division is evaluated on the basis of residual income, the divisional manager would not accept the new investment because it is only good for the company but bad for the division If the division is evaluated on the basis of residual income, the divisional manager would accept the new investment because it is good for the division If the division is evaluated on the basis of ROI, the divisional manager would not accept the new investment because it is only good for the company but bad for the division If the division is evaluated on the basis of ROI, the manager would accept the new investment because it is good for the division Regardless of whether the division is evaluated on the basis of ROI or the residual income, the divisional manager would not accept the new investment because it is bad for the division and the company Consider the following data of B Company: Sales revenue $236,800 Capital turnover 3,20 Return on investment 20.8% Imputed interest rate 10% B Companys residual income: $7,992 None of these $2,736 $11,749 $81,839 C Company had a sales margin of 3%, sales revenue of $160,000, and invested capital of $100,000. The company's ROI was: 3.6% 1.875% 1.6% None of these 4.8% D, Inc. reported a return on investment of 44%, a capital turnover of 5 and invested capital of $45,135. The company's sales revenue was:
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Answer is Regardless of whether the division is evaluated on the basis of ROI or Residual income the ... View the full answer
Related Book For
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
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