The Manager of the West Division of Beach Clothing Company

question 19

Multiple Choice

The manager of the West Division of Beach Clothing Company is evaluating the acquisition of a new embroidery machine.The budgeted operating income of the West Division was $4,000,000 with total assets of $22,000,000 and noninterest-bearing current liabilities of $1,000,000.The proposed investment would add $750,000 to operating income and would require an additional investment of $3,500,000.The targeted rate of return for the West Division is 14 percent and the cost of capital is 9 percent.Ignoring taxes, how much is the residual income of the West division if the embroidery machine is purchased?

• A)$2,545,000
• B)$1,320,000
• C)$2,860,000
• D)$4,456,000

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Definitions:

Appeal To Emotion

A rhetorical strategy or fallacy involving the use of emotional responses rather than valid reasoning to persuade.

Fallacy

A mistaken belief or error in reasoning, often resulting in invalid or misleading arguments.

Poor Children

Refers to children living in conditions of poverty, lacking basic needs like nutrition, clothing, education, and shelter.

Oppositional Defiant Disorder

A behavioral disorder in children characterized by ongoing patterns of anger, irritability, argumentative behavior, and defiance toward authority figures.