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Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.51 percent. Selected operating data for the three divisions
Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 6.51 percent. Selected operating data for the three divisions follow: $ Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets Peak 339,000 $ 203,000 38,000 1,340,000 View Grand 229,000 $ 313,000 118,000 201,000 34,000 32,000 950,000 1,165,000 Required: 1. Compute the return on investment for each division. 2. Compute the residual income for each division
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