The Following Information Is Reported for the Current Year for North

question 94

Multiple Choice

The following information is reported for the current year for North Atlantic Division of XT Enterprises: $$\begin{array} { l r } \text { Sales } & \$ 3,800,000 \\\text { Interest expense } & \$ 250,000 \\\text { Net income } & \$ 500,000 \\\text { Total assets } & \$ 5,000,000 \\\text { Noninterest-bearing current liabilities } & \$ 400,000 \\\text { Cost of capital } & 8 \% \\\text { Required rate of return } & 14 \% \\\text { Tax rate } & 30 \%\end{array}$$ How much is the division's residual income?

• A) $31,000
• B) $275,000
• C) $644,000
• D) $307,000

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Definitions:

Platysma

A muscle in the neck region that plays a role in facial expression, such as lowering the lower jaw and lip.

Mandible

The lower jawbone in humans and some animals, which holds the lower teeth in place and plays a key role in biting and chewing.

Levator Anguli Oris

A facial muscle that elevates the angle of the mouth, contributing to expressions such as smiling.

Normal Populations

Populations in which the distribution of data points follows a normal (bell-shaped) distribution curve.