Kevin Thomas Is the General Manager of the Modular Homes

question 67

Multiple Choice

Kevin Thomas is the general manager of the Modular Homes Division, and his performance is measured using the residual income method. Thomas is reviewing the following forecasted information for his division for next year: (CMA adapted)
$$\begin{array} { l c } \text { Category } & \text { Amount (thousands) } \\\text { Working capital } & \$ 1,800 \\\text { Reverue } & 30,000 \\\text { Plant and equipment } & 17,200\end{array}$$
If the cost of capital is 15% and Thomas wants to achieve a residual income target of $2,000,000, what will costs have to be in order to achieve the target?

• A) $9,000,000.
• B) $10,800,000.
• C) $25,150,000.
• D) $25,690,000.

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Definitions:

Conditions

Broadly refers to the various states of health or existence circumstances, whether physical, mental, environmental, or situational.

Psychodynamic

Refers to a psychological approach that emphasizes the systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Cognitive-Behavioral

Concerns a method of treatment focused on correcting ineffectual feelings, behaviors, and beliefs via a purposeful, structured approach.

Conversion Disorder

A psychiatric disorder characterized by the occurrence of physical symptoms that suggest a medical condition, but which are not fully explained by a medical diagnosis, the effects of substances, or other mental disorders.