Assume the Cell Phone Division of the First Electronics Corporation

question 56

Multiple Choice

Assume the Cell Phone Division of the First Electronics Corporation had the following results last year (in thousands) .Management's target rate of return is 10% and the weighted average cost of capital is 7%.Its effective tax rate is 30%. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 6,000,000 \\\hline \text { Operating income } & 900,000 \\\hline \text { Total assets } & 3,000,000 \\\hline \text { Current liabilities } & 750,000 \\\hline\end{array}$$
- What is the division's Economic Value Added (EVA) ?

• A)$ 157,500
• B)$ 472,500
• C)$ 600,000
• D)$ 630,000

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Definitions:

Empathy

The ability to understand and share the feelings of another person.

Social Interaction

The process by which individuals act and react in relation to others, forming the basis of social relationships and society.

Instrumental Communication

Communication that is directed toward completion of tasks or the achievement of specific objectives.

Ends in Themselves

A concept in moral philosophy, often associated with Immanuel Kant, that individuals or beings have an intrinsic value and should not be used merely as means to an end by others.