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our Company reports the following: Division A Division B Margin ? 7% Turnover 5 ? Average operating assets ? $175,000 Net operating income $ 42,000

our Company reports the following:

Division A Division B

Margin ? 7%

Turnover 5 ?

Average operating assets ? $175,000

Net operating income $ 42,000 ?

Stockholders' equity $300,000 $400,000

Sales $750,000 $525,000

ROI ? 21%

Calculate residual income for Division B when expected return is 5%.

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