Answer the Following Questions Using the Information Below:
Carriage Incorporated

question 105

Multiple Choice

Answer the following questions using the information below:
Carriage Incorporated manufactures horse 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 2015:
$$\begin{array} { | l | r | r | r | r | } \hline & { \text { ASSETS } } && { \text { INCOME } } \\\hline & \text { Book value } & \text { Current value } & \text { Book value } & \text { Current value } \\\hline \text { Wheels } & \$ 485,000 & \$ 550,000 & \$ 120,000 & \$ 140,000 \\\hline \text { Assembly } & \$ 750,000 & \$ 1,200,000 & \$ 160,000 & \$ 172,500 \\\hline\end{array}$$ The company is currently using a 12% required rate of return.
-What are Wheels's and Assembly's return on investment based on book values,respectively?

• A) 0.21; 0.25
• B) 0.25; 0.21
• C) 0.14; 0.25
• D) 0.25; 0.14

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Definitions:

Brand Managers

Individuals responsible for developing and implementing strategies to increase the value and performance of a specific brand, product, or product line.

Sales Promotion

A strategy to increase interest in, or demand for, a product or service, often through discounts or special offers.

Public Relations

Refers to the professional maintenance of a favorable public image by a company or other organization or a famous person.

Public Relations

The process of handling and distributing information from an organization to the public in order to shape their perception.