The Central Division of Wellington Company has a return on investment (ROI) of 12.0%, using assets of $66,000. If the residual income was $2,640, what was the division's cost of capital? (Ignore tax.) Multiple Choice 8.0% None of these. 4.8% 12.0% 24.0%

The Central Division of Wellington Company has a return on investment (ROI) of 12.0%, using assets of $66,000. If the residual income was $2,640, what was the division's cost of capital? (Ignore tax.) Multiple Choice 8.0% None of these. 4.8% 12.0% 24.0%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Shaq Company operates with three segments: Louisiana, Orlando, and Los Angeles. Data regarding…

A: Lets understand the basics.Return on investment ratio shows how much segment net income is generated…

Q: A company's divislon has sales of $6,000,000, Income of $240,000, and average assets of $4,800.000.…

A: Financial ratios are used to check different aspects of a company - liquidity, solvency, etc. They…

Q: Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has…

A: Formula: Return on investment (ROI) = Net income / Average assets Residual income = Net income -…

Q: Crawford Corp. has an ROI of 23% and a residual income of $10,400. If operating income equals…

A: RETURN ON INVESTMENT Return on Investment is the Ratio Between Net Operating Income & Average…

Q: Return on Investment and Residual Income The Emergency Medical Services Company has two divisions…

A: Return on investment is calculated by dividing operating income by average investment. Residual…

Q: The Marine Division of Pacific Corp. has average invested assets of $110,000,000. Sales revenue of…

A: Residual income = Operating income - (Average invested assets x Hurdle rate)

Q: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following…

A: Residual income: Residual income is the income earned by a company over and above the expected…

Q: Required information Use the following information for the Problems below: The following cata…

A: Return on investment is a measure used to evaluate investment performance and profitability. It…

Q: ute ROI for Division B. b. Compute residual income for Division A. c. Division B could increase its…

A: Companies invest in the projects to get the sufficient return on investment and create value for…

Q: The company has three divisions: A, B, and C. The tax rate is 20%. The overall Beta, divisional…

A: Beta is helpful in measuring the security, and volatility of the project after comparing it with the…

Q: None

A: Certainly! Let's break down the calculations and explanations step by step for Division A and…

Q: Required information Use the following information for the Problems below: The following data…

A: Division A:Sales Margin = Income / Sales Revenue24% = $1,800,000 / Sales RevenueSales Revenue =…

Q: The following data are available for two divisions of Solomons Company. North Division South…

A: Answer 1) ROI = Operating profit / investmentsNorth Devision = (10,515,000/49,000,000) x 100 =…

Q: Presented here is information related to the Southern Division of Pronghorn, Inc. Contribution…

A: Return on investment :— It is the ratio between operating income and average operating assets. It is…

Q: Required information Use the following information for the Problems below: The following data…

A: ROI means return on investment. It is the percentage return earned by the entity on the operating…

Q: Use the following information for the Problems below: The following data pertain to three divisions…

A: We can use the following formula to find the missing values of the table.Formula used for…

Q: Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15.8%.…

A: Economic value added is the difference between operating profit and amount of return on invested…

Q: Q23 Selected data from Box Division's accounting records revealed the following: Sales $…

A: Ratio Analysis is the method of checking the company's operational efficiency, liquidity, and…

Q: XYZ Company has two divisions, A and B. Information for each division is as follows:…

A: Margin = Net earnings for division / Total sales for the division Total sales for the division = Net…

Q: Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15…

A: Formula: Residual income = Operating income - ( Average operating Assets x cost of capital % )

Q: 37. Nantucket Company has two divisions that report on a decentralized basis. Their results for 2016…

A: a. Return on Investment (ROI)ROI=Operating Income/Average Assets

Q: Required information Use the following information for the Problems below. The following data…

A: ROI means return on investment.. It is the percentage return earned by the entity on the operating…

Q: Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in…

A: Total assets is the amount owned by the business. Operating income is the income earned from the…

Q: None

A: CalculationsCompany B: Average operating assets (c) ROI=Net operating income/Average operating…

Q: Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets…

A: Solution 1: Residual income = net operating income - Minimum required income = 60000 - (300000*15%)…

Q: LaLa Company has income from operations of $23,280, invested assets of $97,000, and sales of…

A: ROI measures the business income in respect to the investment in the business. Higher ROI is…

Q: Miami Corp. has an operating income of $105,000, average invested assets of $601,000, and a cost of…

A: Residual Income refers to money earned after the revenue-generating work is completed. Residual…

Q: The Western Division of Claremont Company had net operating income of $150,000 and average invested…

A: Return on investment :— It is calculated by dividing net operating income by average total operating…

Q: Required: The following data pertain to three divisions of Nevada Aggregates, Inc. The company's…

A: Under the Ratio Analysis with the help of ratios of sales Margin, Capital turnover ratio, ROI and…

Q: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's…

A: ROI means return on investment. It is the percentage return earned by the entity on the operating…

Q: Protax income Allocated costs() Labor expens Research and development (uncontrollable) Depreciation…

A: Residual income is the difference of net income and income desired by the entity. The formula is as…

Q: Assume the Hiking Shoes division of the Simply Shoes Company had the following results last year (in…

A: Return on Investment shows the profitability or profit making efficiency of the company with the use…

Q: NUBD Company has two divisions, X and Y. Information for each division is as follows: P40,000…

A: Economic value added (EVA) = Net earnings after tax - (Assets invested x Weighted average cost of…

Q: Vishnu

A: Certainly! Let's break down the calculations and explanations for Divisions B and C step by step:###…

Question

Multiple Choice

8.0%
None of these.
4.8%
12.0%
24.0%

Formula Formula ROI (%) = Net Income Principal Amount × 100

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.

Unlock instant AI solutions

Tap the button
to generate a solution

Click the button to generate
a solution

SEE SOLUTION

Similar questions

please answer do not image format
Meman
kai.8
Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $641,300 $378,000 Total capital employed 4,200,000 3,282,500 Washington's actual cost of capital was 12%. Required: 1. Calculate the EVA for the Adams Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 2. Calculate the EVA for the Jefferson Division. If required, enter a negative EVA as a negative number by entering your answer with the minus sign. 3. Conceptual Connection: Is each division creating or destroying wealth? Adams Division Jefferson Division 4. Describe generally the types of actions that Washington’s management team could take to increase Jefferson Division’s EVA? Increase the after-tax operating profit that is generated from using the same amount of invested capital. Continue…
calculate all the missing values a, b, c, d, e, f, g, and h. Madison Corp. has a hurdle rate/required rate of return of 9%. Operating Average income (c) Total assets $115,000 $800,000 (a) (f) $175,000 (e) Return on Residual investment income (ROI) $1,350,000 17% $46,800 (h) $750,000 (g) 13% (RI) (b) (d) $31,000 $36,000 ?
Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: Sales $8,200,000 Operating income $2,788,000 Total assets $3,280,000 Current liabilities $400,000 Required rate of return 14% Weighted average cost of capital 3% What is the Photocopier Division's residual income? Question 16 options: $459,200 $2,328,800 $3,247,200 $2,689,600
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
Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $653,400 $330,750 Total capital employed 4,560,000 3,705,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 7%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
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
Return on Investment and Residual Income Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Net Income Assets Las Vegas $1,260,000 $4,000,000 Dallas 1,500,000 8,000,000 Tampa 2,340,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Las Vegas Dallas Tampa 0% 0% 0% Las Vegas $ Dallas Tampa b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income. RI Rank Rank 0 0 0 ♦