7. Wellinghouse Industries has established a 10 percent target ROI for its divisions. The following data have been gathered for the Ionia Divisions operations for the previous year: Revenues = $30,000,000; Expenses = $28,000,000; Invested capital = $11,200,000.

What is the residual income?

8. The weighted-average cost of capital for Forstone Corporation is 10 percent. Last year one of the divisions of Forstone generated an EVA of $4,000,000, while the divisions assets less its current liabilities were $30,000,000.

How much after-tax operating income did the division generate?