A division has a 30 percent tax rate, a 4.5 percent cost of capital, and a 7.5 percent required rate of return. During the fiscal year, the division reported sales of $3,920,000. Interest expense was $120,000 and net income was $122,800. The division has total assets of $2,950,000 and noninterest-bearing liabilities of $150,000. How much is the division's invested capital?

A.

$2,800,000

B.

None of these answer choices are correct.

C.

$3,100,000

D.

$2,950,000

The evaluation of a subunit should be separated from the evaluation of the subunit's manager because

A.

a subunit always shows better performance.

B.

GAAP requires separate evaluations of managers and the respective subunits.

C.

poor performance by managers may cause subunits to perform poorly.

D.

an excellent manager may be doing the best job possible in a poor subunit.

A division has sales of $350,000 and NOPAT of $30,000. The company's invested capital is $240,000 and its noninterest-bearing current liabilities are $20,000. What is the division's investment turnover as it relates to investment center performance evaluation?

A.

8.00

B.

1.46

C.

3.67

D.

1.59

Which one of the following is not an advantage of decentralization for an organization?

	A.	Better training for future executives, because lower level managers get involved in more diverse business decisions
	B.	Faster response to changing circumstances, because decisions are not made by higher-level managers who need to be advised of all the facts
	C.	Increased motivation of managers, because they are responsible for their own decisions and the results of their respective divisions
	D.	Enhanced goal congruence, because the subunits managers are more focused to improve the performance of the company as a whole.