Problem 2

Pool Accessories, Inc., has two divisionsFurniture and Supplies. Segmented income statement information for the most recent fiscal year ended December 31 is shown as above. Assume the Furniture division had average operating assets totaling $6,500,000 for the year, and the Supplies division had average operating assets of $1,750,000. Assume the cost of capital rate is 10%.

Compute the following foreachdivision:

1. Return on investment (ROI)

1. Residual income (RI)