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James Webb is the general manager of the Industrial Product Division, and his performance is measured using the residual income (RI) method. Webb is reviewing
James Webb is the general manager of the Industrial Product Division, and his performance is measured using the residual income (RI) method. Webb is reviewing the followed forecasted information for his division for the coming year: Category Amount($) Current assets (e.g., inventory) 2,800,000 Revenue 30,000,000 Plant and equipment (net book value) 17,200,000 Current liabilities 1,000,000 If the imputed interest charge (i.e., divisional cost of capital) is 15%, and Webb wants to achieve an RI target of $2 000,000 what will costs have to be in order to achieve the target? Select one: a. $23,620,000. b. $10,800,000. c. $9,000,000. d. $25,690,000. e. $25,150,000
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