Marine Division of Sando Company Reported Net Operating Profit After

question 98

Multiple Choice

Marine Division of Sando Company reported net operating profit after taxes of $27,000 in 2014. The cost of capital was 14 percent and the invested capital was $150,000. Current year R&D expense is $80,000. If R&D had been capitalized, amortization would have been $20,000 for 2014. The income tax rate is 30 percent. How much is adjusted NOPAT to be used in calculating EVA for 2014?

• A) $45,000
• B) $41,000
• C) ($15,000)
• D) $69,000

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Definitions:

Writing Requirement

A legal principle that certain kinds of contracts or agreements must be memorialized in a signed writing to be enforceable.

Apparent Agency

A situation where a principal appears to the public to have granted authority to an agent, even if no actual authority was granted.

Expressed Agency

A legal relationship where an agent has the explicit authorization by the principal to act on their behalf.

Agency by Ratification

The process where a principal approves and legitimizes the unauthorized acts done by an agent on their behalf, thereby giving these actions full legal effect.