Correll Company Has Two Divisions, a and B -Refer to the Figure

question 27

Multiple Choice

Correll Company has two divisions, A and B. Information for each division is as follows:
$\begin{array}{lcc}& \underline{\text { A}}& \underline{\text { B}}\\\text { Net earnings for division } & \$ 40,000 & \$ 260,000 \\\text { Asset base for division } & \$ 100,000 & \$ 1,200,000 \\\text { Target rate of return } & 15 \% & 18 \% \\\text { Margin } & 10 \% & 20 \% \\\text { Weighted average cost of capital } & 12 \% & 12 \%\end{array}$
-Refer to the figure.What is EVA for Division A?

• A)$15,000
• B)$25,000
• C)$28,000
• D)$40,000

---

Definitions:

Statutorily Granted

Pertains to rights or powers given or enforced by a legislative body or statute.

Government Subsidy

Financial assistance provided by the government to individuals, organizations, or industries to support their operation or reduce the price of their products.

Market Price

The current price at which an asset or service can be bought or sold in the market.

Taxable Income

The portion of income that is subject to taxation by a government, after all deductions and exemptions.