ACC-650 TOPIC 7 Assignment Question 9 of 12

ACC-650 TOPIC 7 Assignment Question 9 of 12 View Policies Current Attempt in Progress Paula Boothe, president of the Bramble Corporation, has mandated a minimum 10% return on investment for any project undertaken by the company. Given the company's decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 12%. The Energy Drinks division, under the direction of manager Martin Koch, has achieved a 12% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $1,828,000 in a new line of energy drinks that is expected to generate $334,000 in operating income. Assume that Bramble Corporation's actual weighted-average cost of capital is 10% and its tax rate is 32%. Calculate the economic value added of the proposed new line of energy drinks. (If the economic value added is nqative then enter with a nqative sign preceding the number, e.g. -5, 125 or parenthesis, e.g. (5,125). Round answer to O decimal places, e.g. 5, 125.) Economic value added eTextbook and Media Save for Later (b) Attempts: O of 3 used Submit Answer If Martin Koch is evaluated based on economic value added, will he choose to invest in the new line of energy drinks? eTextbook and Media