2. For the period just ended, Trek Corporations Trailer Division reported profit of $45 million and invested capital of $540 million. Assuming an imputed interest rate of 10%, which of the following choices correctly denotes Trailers ROI and Residual Income

1. ROI- 12%, Residual Income- 9 million
2. ROI- 8.33%, Residual Income- 9 million loss
3. ROI- 10%, Residual Income- 9 million
4. ROI- 9 million, Residual Income- 12%
5. None of the answers is correct

3. Barton Company can acquire a $900,000 machine now that will benefit the firm over the next 6 years

FV of 1(i=8%, n = 6): 1.587

FV of a series of $1 cash flows (i=8%, n = 6): 7.336

PV of $1 (i=8, n=6): 0.630

PV of a series of $1 cash flows (i=8%, n=6): 4.623

Annual savings in cash operating costs are expected to total $195,000. If the hurdle rate is 8%, the investments net present value is

1. 44,970
2. 184,920
3. None of the answers is correct
4. -21,630
5. -181,000

4. The following costs relate to Tower Company; Variable manufacturing costs, $30; variable selling and administrative cost, $15; applied fixed manufacturing overhead, $8; and allocated fixed selling administrative cost, $4. If tower uses absorption manufacturing cost pricing formula, the companys markup percentage would be computed on the basis of

1. 38 cost
2. 30cost
3. 45 cost
4. 57 cost
5. No answers are correct