Solved: The annual information for one division at Webster, Inc. is shown belo

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the annual information for one division at webster inc is shown below

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The annual information for one division at Webster, Inc. is shown below. Income Statement Information Marketing expenses $ 400,000 Operating income $1,500,000 Income tax expense (30% tax rate) $450,000 Balance Sheet Information Average operating assets $2,200,000 Non-interest bearing current liabilities $ 200,000 Percent cost of capital 18% To calculate economic value added (EVA), management requires adjustments for marketing and non-interest bearing current liabilities as outlined below. Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $250,000 for the division. On the income statement, marketing expenses for the year will be added back to operating income, then marketing amortization expense for one year will be deducted. The current year amortization expense will total $120,000 for the division. Non-interest bearing liabilities will be deducted from average operating assets. H11-Q20: After the EVA adjustments to operating income, the amount of net operating profit after tax (adjusted) for the division is? a) $1,155,000\b) $1,780,000 \ c) 1,330,000 \ d) $1,246,000 H11-Q21: After the EVA adjustments to average operating assets, the amount of average operating assets (adjusted) for the division is a) $2,000,000 \ b) $2,400,000 \c) $2,250,000 \d) $2,120,000