The Following Information Pertains to Tyler Company If Invested Capital Is Defined as Total Assets, a Project

question 189

Multiple Choice

The following information pertains to Tyler Company: $$\begin{array} { l l } \text { Total assets } & \$ 150,000 \\\text { Total current liabilities } & 110,000 \\\text { Total expens es } & 160,000 \\\text { Total liabilities } & 115,000 \\\text { Total revenues } & 180,000\end{array}$$ If invested capital is defined as total assets, a project earning an ROI of 12% should be:

• A) rejected if the desired rate of return is less than 12%
• B) rejected
• C) accepted
• D) rejected if the cost of capital is greater than 12%

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Definitions:

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Decision-making Processes

The steps involved in choosing among alternatives to address a problem or capitalize on an opportunity.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, investments dictated by private decision, and prices, production, and the distribution of goods determined mainly by competition in a free market.

Marginal Cost

The cost of producing one additional unit of a good or service, which can change depending on the level of production.