Assume Division 1 of the XYZ Company Had the Following

question 70

Multiple Choice

Assume Division 1 of the XYZ Company had the following results last year. Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%.What is the division's return on investment?

• A)5%
• B)10%
• C)20%
• D)50%

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Definitions:

Production

The process of creating goods or services by combining labor, capital, and resources to meet consumer demand.

Bushels

A unit of volume that is used primarily in the United States to measure agricultural products such as grain.

Marginal Cost

The expense of fabricating another single unit of a product or service.

Average Variable Cost

The total variable costs of production divided by the quantity of output, showing the average cost of producing each unit excluding fixed costs.