Assume that a division of MN Company has a 10% return on sales, income of $10,000, and an investment turnover of 4 times, divisional investment is 1. $10,000

2. $25,000

3. $40,000

4. $100,000

Assume a company purchased a machine for $10,000 and the useful life of the machine is four years. The investment generates a net income (income after depreciation, interest and taxes) of $6,500. Using average divisional investment, the residual divisional income (RDI) =

	1.	1.00
	2.	1.15
	3.	1.25
	4.	1.30