The weighted-average cost of capital of Eagle Ridge is 8 percent. Last year, one of Eagle Ridge's divisions generated an EVA of$3,200,000, while the division's assets less its current liabilities were $24,000,000.How much after-tax operating income did the division generate?After-tax operating income

Formula to compute the EVA :EVA = After-tax operating income - (WACC x Invested Capital).

Answered: The weighted-average cost of capital of…

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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Campbell Technologies, Inc. has three divisions. Campbell has a desired rate of return of 13.0 percent. The operating assets and income for each division are as follows: Operating Operating Divisions Assets Income 580,000 850,000 400,000 $ 99,760 98,600 58,000 Printer $ Сopier Fax Total $1,830,000 $256,360 Campbell headquarters has $124,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 14.5% Copier 13.5% Fax 12.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $124,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $124,000 of investment funds? d. Which division offers the best investment opportunity for Campbell? g.…
Campbell Technologies, Inc. has three divisions. Campbell has a desired rate of return of 13.0 percent. The operating assets and income for each division are as follows: THI Operating Operating Divisions Assets Income $ 99,760 98,600 58,000 Printer $ 580,000 850,000 400,000 Copier Fax Total $1,830,000 $256,360 Campbell headquarters has $124,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Expected ROIS for Additional Investments Divisions Printer 14.5% Copier 13.5% Fax 12.5% Required a-1. Calculate the ROI for each division. a-2. Which division manager is currently producing the highest ROI? b. Based on ROI, which division manager would be most eager to accept the $124,000 of investment funds? c. Based on ROI, which division manager would be least likely to accept the $124,000 of investment funds? d. Which division offers the best investment opportunity for Campbell?…
Blossom Industries operates as an investment center. Buddy Hall, the region's division manager, has set a required minimum rate of return of 15%. Blossom's total assets are $362,000, current liabilities are $162,000, and operating income is $72,000. The company's weighted-average cost of capital is 18% and its tax rate is 28%. Blossom's EVA $
a-2. which division had the better performance? east or west
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106. Subject :- Finance
Required: The following data pertain to three divisions of Nevada Aggregates, Inc. The company's required rate of return on invested capital is 6 percent. (Round "Capital turnover" answers to 2 decimal places.) Sales revenue Income Average investment Sales margin Capital turnover ROI Residual income Division A $ $ $ $ 9,500,000 1,710,000 $ 9,500,000 $ 18 % 1.00 18 % $ 1,140,000 $ Division B 40,800,000 8,160,000 10,200,000 20 % 4.00 80 % 7,548,000 Division C 20 % 0.90 18 % 501,000
Mason Corporation had $1,098,000 in invested assets, sales of $1,257,000, operating income amounting to $246,000, and a desired minimum return on investment of 15%. The residual income for Mason Corporation is a.$113,820 b.($6,000) c.$0 d.$81,300
The following are selected data for the division for the consumer products of ABC Corp for 2020: Sales P 10,000,000 Average invested capital 4,000,000 Net Income 400,000 Cost of Capital 8% What is the asset turn-over ratio for the division? 1. .25 times 2. 2.5 times 3. 8 times 4. 10% O 1 O 2 O 3 O 4
Hansaben
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 20 percent. Selected financial information (in thousands of dollars) for the first year of business follows East Mest Sales revenue Incone Investment (beginning of year) Current liabitities (beginning of year) RED expenditures $3,60e $7,600 655 1,650 330 780 2,600 330 1, 15e 1, esa PRED is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses economic value added. (Enter answers in thousands of dollars. Round your answers to 1 decimal place.) Divisions EVA East 86.0 West 50.0
Colter Steel has $5,650,000 in assets. Temporary current assets $ 3,300,000 Permanent current assets 1,615,000 Fixed assets 735,000 Total assets $ 5,650,000 Short-term rates are 14 percent. Long-term rates are 4 percent. Earnings before interest and taxes are $1,190,000. The tax rate is 30 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?

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