Answer the Following Question(s)using the Information Below

question 131

Multiple Choice

Answer the following question(s) using the information below:
Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million) .Coldbrook Company has profit centres in the following locations with the following operating incomes, total assets, and current liabilities.The cost of equity capital is 15%, while the tax rate is 30%.
-For the period just ended, Trident Ltd.reported profit of $22.6 million and invested capital of $250 million.Assuming an imputed interest rate of 8%, which of the following choices correctly denotes Trident's return on investment (ROI) and residual income respectively?

• A)8.32%; $20.792 million
• B)9.04%; $20,792 million
• C)9.76%; $4.408 million
• D)9.04%; $2.6 million
• E)9.76%; $2.6 million

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