St John's Division Has a Required Rate of Return of 15

question 69

Multiple Choice

St. John's Division has a required rate of return of 15%. The weighted average cost of capital is 10%. Information for St. John's Divisions operations over the past 2 years follows: 20x5 20x4
Current assets $120,000 $100,000
Property, plant and equipment (cost) 300,000 280,000
Accumulated amortization 80,000 60,000
Current liabilities 90,000 70,000
Long-term debt 85,000 80,000
Pretax operating income 52,800 48,900
Income tax rate 30% 30%
What was the St. John's Division residual income for 20x5?

• A)$(12,540)
• B)$3,300
• C)$15,300
• D)$19,800

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Definitions:

Panel on the Nonprofit Sector

An advisory group or committee that focuses on addressing issues, challenges, and opportunities within the nonprofit sector, often providing guidance, research, and recommendations.

Governance Committee

A group within an organization charged with overseeing the strategic direction and accountability, often focusing on board recruitment, selection, and evaluation.

Board Professionals

Specialists or experts who provide guidance, advice, or services to an organization's board of directors, often in legal, financial, or strategic planning areas.

Carver's Model

A governance model created by John Carver that emphasizes the board's responsibility for the organization's purpose, direction, and overall policy.