Q5

Round all rates of return to four significant digits. Required: 1. Compute residual income for each division. By comparing residual income, is it possible to make a useful comparison of divisional performance? 2. Compute the residual rate of return by dividing the residual income by the average operating assets. Enter your answers as percentages, rounded to two decimal places. For example, the decimal value .03827 would be entered as " 3.83 " percent. For example, the decimal value .03827 would be entered as " 3.83 " percent. Is it possible now to say that one division outperformed the other? 3. Compute the return on investment for each division. Enter your answers as percentages, rounded to two decimal places. For example, the decimal value would be entered as " 3.83 " percent. Can we make meaningful comparisons of divisional performance? example, the decimal value .03827 would be entered as " 3.83 " percent