Question
Assume the Solar Division of the Sun Energy Company had the following results last year (in thousands). Managament's target rate of return is 15% and
Assume the Solar Division of the Sun Energy Company had the following results last year (in thousands). Managament's target rate of return is 15% and the weighted average cost of capital 20%. Its effective tax rate is 35%
Sales = $13,000,000
Operating income: $3,900,000
Total assets: $3,000,000
Current Liabilities: 770,000
What is the division's Residual income (RI)?
A) $3,450,000
B) $3,300,000
C) $1,207,500
D) $4,550,000
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Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
9th Edition
978-0-07-76261, 0-07-762611-7, 9780078025297, 978-0073527062
