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Below Is Information for Year Ended 12/31/05 for Company a and Company

question 68

Multiple Choice

Below is information for year ended 12/31/05 for Company A and Company B.  Company A  Company B  Interest expense $400$ Tax expense (40%) 400400 Net income 600600 Total assets 12/31/0510,00010,000 Total debt 5,0000 Equity 5,00010,000\begin{array}{lrr}&\text { Company A }&\text { Company B }\\\text { Interest expense } & \$ 400 & \$ \\\text { Tax expense }(40 \%) & 400 & 400 \\\text { Net income } & 600 & 600 \\\text { Total assets }-12 / 31 / 05 & 10,000 & 10,000 \\\text { Total debt } & 5,000 & 0 \\\text { Equity } & 5,000 & 10,000\end{array}
-Return on assets for Company A and B for 2005 are:  Company A  Company B  A)  5%5% B)  8.4%6% C)  14%6% D)  10%10%\begin{array}{rrr}&\text { Company A }&\text { Company B }\\\text { A) } & 5 \% & 5 \% \\\text { B) } & 8.4 \% & 6 \% \\\text { C) } & 14 \% & 6 \% \\\text { D) } & 10 \% & 10 \%\end{array}

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Definitions:

Perceptual Distortion

A cognitive bias or error that affects the accuracy of one's perception or interpretation of reality.

Vicarious Learning

The process of learning by observing the actions and outcomes of others rather than through direct experience.

Albert Bandura

A psychologist known for his work on social learning theory and for introducing the concept of self-efficacy.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

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