Bellingham Division Has a Required Rate of Return by Corporate

question 67

Multiple Choice

Bellingham Division has a required rate of return by corporate headquarters of 20%. The weighted average cost of capital is 12%. You are given the following information for Bellingham's operations for a two-year period: 2005 2004
Current assets $ 50,000 $ 60,000
Long-term assets 200,000 204,000
Accumulated amortization 60,000 44,000
Current liabilities 40,000 20,000
Long-term debt 100,000 140,000
Operating income for the year 19,000 21,000
Tax rate 40% 40%
The ROI for 2005 was:

• A)9)3%
• B)10.0%
• C)3)7%
• D)20.0%

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Definitions:

Ruthenium

A rare transition metal belonging to the platinum group of the periodic table, with the symbol Ru and atomic number 44.

Elemental Symbol

A one- or two-letter notation derived from the name of an element, used to represent it in chemical formulas and equations.

Rubidium

A soft, silvery-white metallic element, symbol Rb, used in research and in manufacturing specialty glasses.

Elemental Symbol

A one or two-letter abbreviation that represents an element on the periodic table.