18)

Izzy Division of Marine Boats Corporation had the following results last year (in thousands):

Sales - $4,500,000

Operating income - $700,000

Total assets - $4,000,000

Current liabilities - $250,000

Management's target rate of return is 10% and the weighted average cost of capital is 8%.

What is the Izzy Divisions's Residual Income (RI)?

A) $300,000

B) $700,000

C) $70,000

D) $400,000