26.The simple idea behind residual income is to have actually a division maximize its:   

A.earnings per share.

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B.income in overfill of a that company imputed interest charge.

C.cost that capital.

D.cash flows.

E.invested capital.

27.Sunrise Corporation has a return on invest of 15%. A Sunrise division, which right now has a 13% ROI and $750,000 that residual income, is contemplating a massive new investment that will (1) minimize divisional ROI and (2) create $120,000 that residual income. If Sunrise strives for goal congruence, the investment:   

A.should not be acquired due to the fact that it reduces divisional ROI.

B.should not be acquired since it produces $120,000 the residual income.

C.should no be acquired since the division's ROI is less than the this firm ROI before the investment is considered.

D.should it is in acquired due to the fact that it to produce $120,000 of residual income for the division.

E.should it is in acquired because after the acquisition, the division's ROI and residual revenue are both positive numbers.

28.The Fitzhugh division of general Enterprises has actually a an unfavorable residual revenue of $540,000. Fitzhugh's management is contemplating an investment possibility that will mitigate this negative amount come $400,000. The investment:   

A.should be pursued because it is attractive native both the divisional and also corporate perspectives.

B.should it is in pursued since it is attractive native the divisional perspective although not from the this firm perspective.

C.should be pursued since it is attractive native the corporate view although no from the divisional perspective.

D.should not be pursued because it is not attractive from both the divisional and corporate perspectives.

E.should no be pursued because it is unattractive from the divisional perspective although that is attractive from the this firm perspective.

29.The Magellan division of an international Corporation, which has income that $250,000 and an asset invest of $1,562,500, is examining an investment opportunity that will price $450,000 and also yield a profit of $67,500. Suspect that global uses an imputed interest charge of 14%, would the invest be attractive to:1—Divisional management if ROI is offered to evaluate divisional performance?2—Divisional administration if residual revenue (RI) is provided to advice divisional performance?3—The administration of worldwide Corporation? 


A.Choice A

B.Choice B

C.Choice C

D.Choice D

E.Choice E

30.The small Rock division of classics Companies currently reports a benefit of $3.6 million. Divisional invested capital totals $9.5 million; the imputed interest price is 12%. On the communication of this information, small Rock's residual income is:   





E.None of the other answers are correct.

31.The following information relates come the Cliff division of mountain Enterprises:Income because that the period just ended: $1,500,000Invested capital: $12,000,000If the firm has an imputed interest rate of 11%, Cliff's residual revenue would be:   




D.some various other dollar amount various other than the ones given.

E.a percentage better than 11%.

32.Excel department reported a residual income of $200,000 because that the year just ended. The division had $8,000,000 of invest capital and also $1,000,000 that income. On the communication of this information, the imputed interest rate was:   





E.None of the other answers space correct.

33.BFF Corporation offers an imputed interest rate of 13% in the calculation of residual income. Division X, which is part of BFF, had actually invested resources of $1,200,000 and also an ROI that 16%. On the basis of this information, X's residual income was:   





E.None the the other answers room correct.

34.Imputed interest can ideal be explained as:   

A.the company's load average expense of capital.

B.the prime interest price on the date of the transaction.

C.the interest rate charged for the company's bonds.

D.the minimum required rate the return on invest capital.

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E.the after-tax price of the attention payments ~ above debt.

35.The following information comes to Bishop Concrete: 

 The company's imputed interest price is 8%.The capital turnover is: