Tomlinson Tech has a cost of capital of 8 percent, a required rate of return of 9.5%, and an income tax rate of 30 percent.The Consumer Division of Tomlinson Tech has assets totaling $2,800,000 and current liabilities at $180,000 with $40,000 of this amount being interest-bearing.Sales for the year totaled $1,900,000 and interest expense totaled $20,000.Net income was $166,500 for the year.How much is the Consumer Division's invested capital?
A)$2,560,000
B)$2,660,000
C)$2,940,000
D)$2,620,000

Question

Quizplus · Accepted Answer

Invested Capital = Total Assets - Current Liabilities + Interest-Bearing Current Liabilities
Invested Capital = $2,800,000 - $180,000 + $40,000
Invested Capital = $2,660,000

Tomlinson Tech Has a Cost of Capital of 8 Percent