Use the Following Information to Answer the Question(s)below

question 24

Multiple Choice

Use the following information to answer the question(s) below.
Nielson Motors has a debt-equity ratio of 1.8,an equity beta of 1.6,and a debt beta of 0.20.It is currently evaluating the following projects,none of which would change Nielson's volatility. (All amounts are in $millions. )
-Nielson Motors should accept those projects with profitability ratios greater than:

• A)0.15
• B)0.175
• C)0.20
• D)0.225

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Definitions:

Plantwide Overhead Rate

A single overhead rate calculated by dividing total factory overhead by the total amount of the allocation base used across the entire plant.

Direct Labor

Labor costs associated with employees who are directly involved in the production of goods or the provision of services.

Predetermined Overhead Rate

A rate used to assign overhead costs to products or services, calculated by dividing estimated overhead by an allocation base such as labor hours.

Predetermined Overhead Rate

A pre-determined rate used to allocate manufacturing overhead expenses to products, based on a specified activity measure, and calculated prior to the start of a period.