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Concert Division reported a residual income of $200,000 for the year just ended. The division had $8,000,000 of invested capital and $1,000,000 of income. On
Concert Division reported a residual income of $200,000 for the year just ended. The division had $8,000,000 of invested capital and $1,000,000 of income. On the basis of this information, the imputed interest rate was: 10.0% 2.596. 20.0%. 12.5%. None of the answers is correct. QUESTION 16 The Holder Division of Extraordinary Enterprises has a negative residual income of $540,000. Holder's management is contemplating an investment opportunity that will reduce this negative amount to $400,000. The investment: should be pursued because it is attractive from the divisional perspective although not from the corporate perspective. should not be pursued because it is unattractive from both the divisional and corporate perspectives. should be pursued because it is attractive from both the divisional and corporate perspectives. should not be pursued because it is unattractive from the divisional perspective although it is attractive from the corporate perspective. should be pursued because it is attractive from the corporate perspective although not from the divisional perspective
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