The West Division of Frede Corporation Had Average Operating Assets

question 47

Multiple Choice

The West Division of Frede Corporation had average operating assets of $700,000 and net operating income of $120,800 in December. The minimum required rate of return for performance evaluation purposes is 16%. What was the West Division's minimum required return in December?

• A)$112,000
• B)$120,800
• C)$131,328
• D)$19,328

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Definitions:

API GL-5

A classification of gear lubricants specified by the American Petroleum Institute (API) that indicates the lubricant is suitable for high-speed, high-shock load applications, such as in vehicle differentials.

Highway 5th Wheels

The coupling mechanism on a highway truck or trailer that allows for articulation and pivot of attached trailers.

Manufacturer

A company or entity that produces goods, often on a large scale, using raw materials, machinery, and labor.

OEMs

Original Equipment Manufacturers, companies that produce parts and equipment that may be marketed by another manufacturer.