(c) Assume that Sunland Corporation's weighted-average cost of capital is 7% and its tax rate is 30%. Calculate economic value added.(If the amount is negative then enter with a negative sign preceding the number, eg. -5,125 or parentheses, e.g. (5,125).)Economic Value AddedAshtonDryePooleWhich division performed the best?%24%24%24 Sunland Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisionalmanagers are to decide which performance measure will be used to evaluate profitability. Sunland Corporation requires a 10%minimum return on investment.The following information is available for the year just ended.DivisionalDivisionalOperatingInvestedDivisionOperating AssetsIncomeCapitalAshton$870,000$93,090$197,000Drye790,00088,48067,000Poole485,00057,230117,000

EVA is economic value added for the business. This is the excess of net income generated by the…

Answered: (c) Assume that Sunland Corporation's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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K Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 35% long-term debt, 15% preferred stock, and 50% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 29%. Debt The firm can sell for $1025 a 12-year, $1,000-par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2.5% of the par value is required. Preferred stock 9.00% (annual dividend) preferred stock having a par value of $100 can be sold for $96. An additional fee of $5 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $60 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.70 ten years ago to the $4.40 dividend payment, Do, that the company just recently…
Gg.3.
Estimate a firm's economic value added (EVA) based on the following information: NOPAT = $400,000; amount of financial capital used = $1,600,000; and WACC = 19%. $26,000 $36,000 $96,000 54,000
Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in thousands). Management's target rate of return is 10% and the weighted average cost of capital is 30%. Its effective tax rate is 40%. Sales Operating income Total assets Current liabilities What is the division's Residual Income (RI)? OA. $100,000 O B. $4,400,000 Ⓒ C. $700,000 O D. $280,000 $11,000,000 1,100,000 4,000,000 780,000
Firm K has a margin of 9%, turnover of 1.4, and sales of $1,610,000. Required: Calculate Firm K's net Income, average total assets, and return on Investment (ROI). Choose Factors: Choose Numerator: Net Income * Choose Factors: X Average Total Assets /Choose Denominator: = 1 Return on Investment Choose Numerator: /Choose Denominator: 1 1 Net Income Net Income Average Total Assets Average Total Assets 0 Return on Investment Return on Investment 0
Data on three unrelated companies are given in the following table. E (Click the icon to view the table.) Fill in the missing information in the preceding table. (Enter the capital turnover to two decimal places X.XX.) Osborne, Inc. Sales $ 114.000 Operating income $ 39,900 Total assets $ 71,250 Sales margin % Capital turnover Return on investment (ROI) Target rate of return. 10 % Residual income
go.4
Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 5%, its effective tax rate is 35%. Sales Operating income Total assets Current liabilities What is the division's Residual Income (RI)? ⒸA. $280,000 OB. $1,750,000 OC. $800,000 OD. $1,800,000 $5,000,000 2,000,000 4,000,000 840,000
Using the Van Accessible data from Table 5–4: Calculate the degree of operating leverage (DOL). Calculate the degree of financial leverage (DFL). Calculate the degree of combined leverage (DCL). Explain what DOL, DFL, and DCL mean.
Provide correct solution
Determining missing items in return on investment computation One item is omitted from each of the following computations of the return on investment: Return on Investment = Profit Margin x Investment Turnover 27 % = 10 % x (a) (b) = 16 % x 0.75 24 % = (c) x 1.5 14 % = 20 % x (d) (e) = 15 % x 1.8 Determine the missing items identified by the letters as shown above. If required, round your answers to two decimal places. (a) fill in the blank 1 (b) fill in the blank 2 % (c) fill in the blank 3 % (d) fill in the blank 4 (e) fill in the blank 5 %
Determining Missing Items in Return Computation One item is omitted from each of the following computations of the return on investment: Rate of Return on Investment = Profit Margin x Investment Turnover 19 % 10 % (a) (b) 16 % 0.75 33 % (c) X 1.5 12 % 20 % (d) (e) 15 % 1.8 Determine the missing items identified by the letters as shown above. If required, round your answers to two decimal places. (a) (b) % (c) (d) (e) %

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