The Manager of Gamma Division Projects the Following for Next $\begin{array}{ll}\text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$

question 44

Multiple Choice

The manager of Gamma Division projects the following for next year:
The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The company's minimum rate of return is 12%.
$\begin{array}{ll}\text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$
-Refer to the Figure.What is the residual income for Gamma Division with the additional project?

• A)$4,200
• B)$6,000
• C)$6,600
• D)$27,600

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Definitions:

Euromarket

An international financial market for currencies, securities, and bank deposits, largely operated outside the regulatory purview of any single country.

Large Borrowers

Individuals or entities that take out significant loans from financial institutions, often with substantial collateral and terms of agreement.

Exchange Rate Risk

The potential for loss due to fluctuations in the exchange rates between currencies, affecting companies that engage in international business.

International Operations

Business activities conducted in more than one country, involving cross-border transactions of goods, services, or capital.