Reference no: EM132613625
Questions -
Q1. Bloomer Company has an operating income of $68,000 on revenues of $1,000,000. Average invested assets are $600,000 and Bloomer Company has an 8% cost of capital. What is the residual income?
Q2. Barron Corp. has a residual income of $21,000 on invested assets of $450,000. If the cost of capital is 12%, what is the operating income?
Q3. Persius Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $150,000. The equipment will have an initial cost of $400,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the annual net cash flow?
A. $25,000
B. $35,000
C. $85,000
D. $215,000
Q4. Sorius Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $120,000. The equipment will have an initial cost of $400,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the annual net income? Ignore income taxes.
A. $55,000
B. $35,000
C. $165,000
D. $185,000
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