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Oatley Fabrics Company has two retail divisions, which reported the following results for last year Profit Average invested capital ROI $ $ Furnishing Division 1,368,000

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Oatley Fabrics Company has two retail divisions, which reported the following results for last year Profit Average invested capital ROI $ $ Furnishing Division 1,368,000 9,120,000 15% Dressmaking Division $ 303,000 $ 1,520,000 20x Required: 1. Which was the more successful division? Think carefully about this, and explain your answer. 2. Calculate each division's residual income under each of the following assumptions about the firm's minimum required rate of return; a. Imputed interest rate of 12 per cent: b. Imputed interest rate of 15 per cent c. Imputed interest rate of 18 per cent: Furnishing Dressmaking a Residual income b. Residual income c. Residual income

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