The Following Income Statements and Other Information Are Available for the Biltmore

question 24

Multiple Choice

The following income statements and other information are available for the Biltmore Company:
$\begin{array}{lrr}&2014&2013\\\text { Sales } & \$ 230,000,000 & \$ 220,000,000 \\\text { Cost of goods sold } & \underline{105,000,000} & \underline{96,000,000} \\\text { Gross margin } & \underline{145,000,000} & \underline{124,000,000}\\\text { Selling and administrative costs } & 25,000,000 & 22,500,000 \\\text { Research and development } & 15,600,000 & 12,400,000 \\\text { Income from operations } & 104,400,000 & 89,100,000 \\\text { Income taxes expense } & 36,540,000 & 31,185,000\\\text { Net income }&\$67,860,000&\$67,915,000\\\text { Total assets }&\$ 650,000,000 & \$ 605,000,000 \\\text { Noninterest-bearing current liabilities }&\$ 15,000,000 & \$ 12,300,000\end{array}$
Biltmore's interest expense is $0, its income tax rate is 35 percent, and its cost of capital is 10 percent. Biltmore amortizes R&D over 4 years. By how much is invested capital adjusted as it relates to computing EVA for 2014?

• A) $17,900,000
• B) $7,800,000
• C) $15,600,000
• D) $21,000,000

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Definitions:

Defensive Manoeuvers

Strategies or behaviors individuals employ to protect themselves from perceived threats or anxiety, often unconsciously.

Unconscious

A part of the mind that is inaccessible to the conscious mind but affects thoughts and behavior.

Resistance

In psychology, a patient's unconscious defense mechanisms that hinder progress in psychoanalysis or therapy; in physics, the measure of the opposition to current flow in an electrical circuit.

Terminate Therapy

The process of concluding professional psychological or psychiatric treatment, often when objectives have been met or circumstances change.