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

question 26

Multiple Choice

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

• A)$8,190,000
• B)$11,700,000
• C)$8,600,000
• D)$6,020,000

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Definitions:

Individual Scores

The specific values or results obtained by individuals in a test or assessment, reflecting their performance or achievement.

T-statistic

A ratio that is derived from the standardized difference between two sample means divided by the standard error of the difference, used in hypothesis testing.

Sample Mean

The average value computed from a sample set of data, representative of the population mean.

Hypothesized Population Mean

This is an assumed average of a particular characteristic in a population, used as a standard for hypothesis testing in statistical analysis.