Chapter 9 Q3 and 4

Rooney Corporation has a desired rate of return of 10 percent. Willam Tobin is In charge of one of Rooney's three Investment centers. His center controlled operating assets of $2,500,000 that were used to earn $267,000 of operating income. Required Compute Mr. Tobin's residual income. Solomon Home Maintenance Company earned operating Income of $6,254,000 on operating assets of $59,000,000 during Year 2. The Tree Cutting Division earned $1,217,200 on operating assets of $6,800,000. Solomon has offered the Tree Cutting DIvlsion $2,190,000 of additional operating assets. The manager of the Tree Cutting Division belleves he could use the additional assets to generate operating Income amounting to $442,380. Solomon has a desired return on Investment (ROI) of 8.60 percent. Required a. Calculate the return on Investment for Solomon, the Tree Cutting Division, and the additional Investment opportunity. b. Calculate the residual Income for Solomon, the Tree Cutting DivIsion, and the additional Investment opportunity. Complete this question by entering your answers in the tabs below. Calculate the return on investment for Solomon, the Tree Cutting Division, and the additional investment opportunity. Note: Round your answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45 ). Calculate the residual income for Solomon, the Tree Cutting Division, and the additional investment opportunity