Standard Media Has a Required Rate of Return of 5

question 108

Multiple Choice

Standard Media has a required rate of return of 5 percent, a cost of capital of 4 percent, and an income tax rate of 30 percent.The following information about its two divisions has been provided by management: $\begin{array}{lrr}&\text { Audio Division}&\text { Video Division }\\\text { NOPAT } & \$ 1,400,000 & \$ 2,000,000 \\\text { Sales } & \$ 10,000,000 & \$ 12,500,000 \\\text { Invested capital } & \$ 15,000,000 & \$ 17,500,000\end{array}$ An opportunity is available that yields an expected income of $45,900 on an investment of $450,000.If the divisions are evaluated based on return on investment, which division(s) will accept the opportunity?

• A)Both will accept.
• B)Neither will accept.
• C)Only the Video Division will accept.
• D)Only the Audio division will accept.

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Definitions:

Schizophrenia

Schizophrenia is a severe mental disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior, often resulting in hallucinations, delusions, and disorganized speech.

Unconditional Positive Regard

A concept in client-centered therapy proposing that the therapist should provide a client with unwavering support and acceptance, regardless of what the client says or does.

Client-Centered Therapy

A psychological treatment model that emphasizes providing a supporting environment where clients can explore and solve their problems.

Genuineness

The quality of being honest, sincere, and authentic in one's expressions or feelings.