Sanchez Company Reports the Following Information The Adjusted Figures Reflect Adjustments Used by Stern Stewart

question 95

Multiple Choice

Sanchez Company reports the following information:
$\begin{array} { l } \text {Net operating profit after taxes }&\$500,000 \\ \text {Adjusted net operating profit after taxes }&\$670,000 \\ \text {Average invested capital }&\$ 500,000\\ \text {Adjusted average invested capital }&\$700,000 \\ \text { After-taxcost of capital}&10\%\\\end{array}$

The adjusted figures reflect adjustments used by Stern Stewart & Company.What is the EVA for Sanchez Company?

• A) $430,000
• B) $450,000
• C) $600,000
• D) $620,000

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Definitions:

Rack-and-pinion

A type of linear actuator that comprises a circular gear (the pinion) engaging a linear gear (the rack), converting rotary motion into linear motion.

Parallelogram Steering

A steering linkage design in many vehicles where the linkage forms a parallelogram, allowing the wheels to move parallel to each other during turns.

Linkage Components

Various mechanical parts that connect together to transmit motion in order to perform a specific task.

Tie-rods

Components in a vehicle's steering system that help transfer the movement from the steering rack or center link to the steering knuckle, thus making the wheels turn.