Question
June sales were $5,000 while projected sales for July and August were $6,500 and $7,000, respectively. Sales are 35% cash and 65% credit. All credit
June sales were $5,000 while projected sales for July and August were $6,500 and $7,000, respectively. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale. What are the total expected collections for July?
$7,975 | |
$6,825 | |
$5,525 | |
$5,975 |
Question
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 7%. Management calculated a weighted-average cost of capital (WACC) of 5%. Allied's corporate tax rate is 30%.
Sales | $700,000 |
Operating income | $175,000 |
Total assets | $1,500,000 |
Current liabilities | $600,000 |
What is the division's Residual Income (RI)?
$77,500 | |
$100,000 | |
$70,000 | |
$126,000 |
Question
The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year. The total assets of the Pasta Division were $2,750,000, while current liabilities were $330,000. Whole Grain Corporation's target rate of return is 12%, while its weighted average cost of capital is 8%. The effective tax rate for the company is 30%.
What is the Pasta Division's Return on Investment (ROI)?
6% | |
50% | |
25% | |
200% |
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