Problem 12-18 (Part Level Submission) (a) Problem 12-18 (Part Level Submission)
ID: 2472998 • Letter: P
Question
Problem 12-18 (Part Level Submission)
(a)
Problem 12-18 (Part Level Submission)
Top management of the Gates Corporation is trying to construct a performance evaluation system to use to evaluate each of its three divisions. This past year’s financial data are as follows:Division A Division B Division C Total assets $908,000 $18,740,000 $11,100,000 Noninterest-bearing current liabilities 51,400 2,152,000 1,033,000 Net income 178,000 1,839,000 1,378,000 Interest expense 51,400 1,933,000 1,246,000 Tax rate 40% 40% 40% Required rate of return 10% 12% 14%
Explanation / Answer
Net Income 1780000 1839000 1378000 Less; Interest 51400 1933000 1246000 Income after Interest 1728600 -94000 132000 Taxes 691440 52800 Income after taxes 1037160 79200 Ranked I III II