Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. paula boothe, president of the blue corporation, h

Paula Boothe, president of the Blue Corporation, has mandated a minimum 10% return...

50.1K

Verified Solution

Question

Accounting

image

Paula Boothe, president of the Blue Corporation, has mandated a minimum 10% return on investment for any project undertaken by the company. Given the company's decentralization, Paula leaves all investment decisions to the divisional managers as long as they anticipate a minimum rate of return of at least 12%. The Energy Drinks division, under the direction of manager Martin Koch, has achieved a 14% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $1,814,000 in a new line of energy drinks that is expected to generate $311,000 in operating income. Assume that Blue Corporation's actual weighted average cost of capital is 10% and its tax rate is 31%. (a) Calculate the economic value added of the proposed new line of energy drinks. (If the economic value added is negative then enter with a negative sign preceding the number, e.g.-5,125 or parenthesis, e.g. (5,125). Round answer to 0 decimal places, e.g. 5,125.) Economic value added $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

Solve the inequality (x - 5)(x-6) <0Select all the intervals below that are included in...

Statistics
1.2K views

The grade point averages GPA for 12 randomly selected college students are shown on the...

Chemistry
1.2K views

Calculate the adiabatic flame temperature for the following mixtures initially at 298 K: stoichiometric butane-air mixture, stoichiometric...

Finance
1.2K views

If the price of your bond is currently worth $1,030, has a maturity of twelve years...

Advance Math
1.2K views

Let sn = 21/n+ n sin(n?/2), n ? N. (a) List all subsequential limits of (sn). (b)...

Biology
1.2K views

The hypothesis for a fruit fly behavior experiment states that flies will prefer side B...

Basic Math
1.2K views

Solve for u, where u is a real number.??u=2If there is more than one solution,...

Statistics
1.2K views

5 a A bookcase has 36 math books and 14 science books Twelve of the...

Algebra
1.2K views

14 15 16 17 18 19 20 21 Temperature C 22 Warm Up The dot...

Accounting
1.2K views

the 318,991 is not correct Required information [The following information applies...

Accounting
1.2K views

please help A lessee with a lease containing a bargain purchase option should depreciate...

Accounting
1.2K views

Vail is one of the largest ski resorts in the United States. Suppose that on...