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

question 49

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 EVA for 20x5?

• A)$3,960
• B)$11,960
• C)$20,460
• D)$27,800

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Definitions:

Participation

The act of taking part or involving oneself in an activity or discussion within an organization to contribute to decision-making processes.

Valued Rewards

Incentives or recognition that hold significant meaning or worth to an individual or group, motivating behavior and fostering a sense of achievement and satisfaction.

Job Performance

The level of effectiveness and efficiency with which an individual fulfills their job responsibilities and tasks.

Expectancy Theory

A motivational theory that proposes individuals are motivated to act in a certain way based on their expectation that their actions will lead to a desired outcome.