The Following Income Statements for the Year Ending December 31 $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { For the Year Ending December } 31$

question 17

Multiple Choice

The following income statements for the year ending December 31 and other information are available for the Langston Division of Act Company: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { For the Year Ending December } 31$
$\begin{array}{lrr}&2018&2017\\\text { Sales } & \$ 250,000,000 & \$ 220,000,000 \\\text { Cost of goods sold } & 105,000,000 & 96,000,000\\\text { Gross margin } & 145,000,000 & 124,000,000 \\\text { Selling and administrative costs } & 25,000,000 & 22,500,000 \\\text { Research and development } & 15,600,000 & 12,400,000\\\text { Income from operations } & 104,400,000 & 89,100,000 \\\text { Less taxes on income } & 31,320,000 & 26,730,000\\\text { Net income }&\$73,080,000&\$62,370,000\\\\\text { Total assets } & \$ 650,000,000 & \$ 605,000,000 \\\text { Noninterest-bearing current liabilities } & \$ 15,000,000 & \$ 12,300,000 \\\text { Required rate of return } & 12 \% & 12 \% \\\text { Cost of capital } & 10 \% & 10 \%\end{array}$ Interest expense is $0 and the tax rate is 30 percent.Langston Division amortizes intangible costs over 4 years.By how much is invested capital adjusted as it relates to computing EVA for 2018?

• A)$17,900,000
• B)$11,700,000
• C)$6,020,000
• D)$8,600,000

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Definitions:

Distribution of Wealth

The way in which the wealth of a country is shared among its citizens or different groups in society.

Distribution of Income

The way in which a nation's total income is spread among its population.

United States

A nation located in North America that is made up of 50 states and one federal district, renowned for its significant economic size and varied demographics.

Minimum Wage

The lowest legal salary that employers can pay workers, set by government policy to ensure a minimum standard of living for employees.