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Bellingham Division Has a Required Rate of Return by Corporate

question 22

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 average investment to be used in the EVA computation for 2005 was:

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Definitions:

Neuropsychological Tests

Tests of cognitive, sensory, and/or motor skills that attempt to differentiate people with deficits in these areas from normal subjects.

Cognitive Deficits

Impairments in mental processes such as attention, memory, language, and problem-solving, which can affect an individual's ability to perform daily activities.

Computerized Tomography

A diagnostic medical imaging technique that uses a series of X-ray images taken from different angles around the body, combined by computer processing, to create cross-sectional images of the bones, blood vessels, and soft tissues.

Two-Dimensional Images

Visual representations of objects, scenes, or ideas on a flat surface that have height and width but no depth.