Answer the Following Question(s)using the Information Below

question 141

Multiple Choice

Answer the following question(s) using the information below:
Carriage Ltd.manufactures baby carriages.The company has two divisions, Wheels and Assembly.Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures.The following information is provided for the year just ended:
The company is currently using a 12% required rate of return.
-What are Wheels's and Assembly's residual incomes based on book values, respectively?

• A)$74,000; $28,500
• B)$61,800; $70,000
• C)$63,500; $59.500
• D)$28,500; $74,000
• E)$101,800; $70,000

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Definitions:

Hyperinflations

An extremely high and typically accelerating inflation rate, often exceeding 50% per month, leading to a rapid erosion of the real value of the local currency and causing the population to minimize their holdings of the local money.

Money Growth

An increase in the amount of money in circulation or in the overall money supply within an economy.

Real Interest Rate

The interest rate that has been adjusted for inflation, reflecting the true cost of borrowing or real yield on investment.

Inflation Rate

How quickly the average cost of goods and services goes up, resulting in a drop in the ability to purchase.