# 51 what were the sales for beta division 51 a 7 151 800 b 4 333 333 c 5 952 380 d 4302300

51)

What were the sales for Beta Division?

51)

______ A)

$7,151,800 B)

$4,333,333 C)

$5,952,380 D)

$6,500,000 E)

$6,326,787

*Use the information below to answer the following question(s).*

Brandorf Company has two sources of funds-long term debt with a market and book value of $9 Million issued at an interest rate of 10 percent, and equity capital that has a market value of $6 million (book value of $2 million). Brandorf Company has profit centres in the following locations with the following data. The cost of equity capital is 15 percent, while the tax rate is 30 percent.

Total

OperatingCurrent

Income

Assets Liabilities

Ottawa$480,000$2,000,000 $100,000

St. Johns$600,000$4,000,000 $300,000

Regina$1,020,000$6,000,000 $600,000

52)

What is EVA for Ottawa?

52)

______ A)

$42,600 B)

$142,200 C)

$480,000 D)

$140,000 E)

$163,200

53)

What is EVA for St. Johns?

53)

______ A)

$200,000 B)

$163,200 C)

$42,600 D)

$145,000 E)

$142,200

54)

A company's weighted-average cost of capital [WACC] was 9.6% last year. The company has $6,000,000 of bonds payable (its only debt) with a 9.25% coupon, and has $9,000,000 in equity capital. The tax rate is 35%.

Required:

What is the company's cost of debt funding? (two decimal places only)

54)

______ A)

6.00% B)

9.25% C)

12.00% D)

6.50% E)

6.25%

55)

A company's weighted-average cost of capital [WACC] was 9.6% last year. The company has $6,000,000 of bonds payable (its only debt) with a 9.25% coupon, and has $9,000,000 in equity capital. The tax rate is 35%.

Required:

What is the company's cost of equity capital? (two decimal places only)

55)

______ A)

12.00% B)

9.25% C)

6.00% D)

6.50% E)

6.25%

*Use the information below to answer the following question(s).*

The following data are available for a foundry operation started as a new company four years ago:

current liabilities$170,000

operating income$176,200

NBV long-term assets$800,000

Current assets$300,000

Gross book value *$1,100,000

Estimated total useful life *8 years

Age of assets *4 years

Construction cost index end of year 4160

* = long-term assets

56)

Required:

What is the NBV of the long-term assets at current cost at the end of year 4?

56)

______ A)

$220,000 B)

$1,760,000 C)

$880,000 D)

$1,180,000 E)

$106,200

57)

Required:

What is the current-cost amortization in year 4 dollars?

57)

______ A)

$1,180,000 B)

$220,000 C)

$880,000 D)

$1,760,000 E)

$93,700

58)

Required:

What is the year 4 operating income using year-4 current cost amortization?

58)

______ A)

$93,700 B)

$1,180,000 C)

$880,000 D)

$1,760,000 E)

$220,000

59)

Required:

What is the ROI using current-cost amortization?

59)

______ A)

7.94% B)

11.25% C)

11.03% D)

10.50% E)

10.95%

*Use the information below to answer the following question(s).*

Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Bleach-2. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2001:

AssetsIncome

Book valueCurrent valueBook valueCurrent value

Bleach$225,000$300,000$150,000$155,000

Bleach-2450,000250,000100,000105,000

The company is currently using a required rate of return of 15 percent.

60)

What are Bleach's and Bleach-2's return on investment based on current values?

60)

______ A)

0.22; 0.67 B)

0.52; 0.42 C)

0.42; 0.52 D)

0.67; 0.22 E)

0.50; 0.45