Question 1

Dapper Company received $20,000 cash from the sale of a machine that had an $29,000 book value. If the company is subject to a 40% income tax rate, the net cash flow to use in a discounted-cash-flow analysis would be:

Multiple Choice

$20,000.

$12,000.

$16,400.

$23,600.

$8,000.

Question 2

The following costs relate to Tower Company: Variable manufacturing cost, $34; variable selling and administrative cost, $12; applied fixed manufacturing overhead, $19; and allocated fixed selling and administrative cost, $8. If Tower uses total-cost pricing formulas, the company's markup percentage would be computed on the basis of:

Multiple Choice

None of the answers is correct.

$73.

$53.

$46.

$34.

Question 3

The following information relates to the Corner Division of Hometown Enterprises: Income for the period just ended: $1,000,000 Invested capital: $9,500,000 If the company has an imputed interest rate of 9%, Corner's residual income would be:

Multiple Choice

A percentage greater than 9%.

Some other dollar amount other than the ones given.

$855,000.

$145,000.

$90,000.

Question 4

Concert Division reported a residual income of $177,500 for the year just ended. The division had $8,250,000 of invested capital and $1,250,000 of income. On the basis of this information, the imputed interest rate was:

Multiple Choice

None of the answers is correct.

14.20%.

15.15%.

13.00%.

2.15%.

Question 5