_Residual Income

The income from operations and the amount of invested assets in each division of Magentic Zero Industries are as follows:

	Income from Operations		Invested Assets
Retail Division	$343,200		$1,320,000
Commercial Division	320,000		1,600,000
Internet Division	176,000		800,000

Assume that management has established a 10% minimum acceptable rate of return for invested assets.

a. Determine the residual income for each division.

	Retail Division		Commercial Division		Internet Division
Income from operations	$343,200		$320,000		$176,000
Minimum amount of income from operations	__________		__________		__________
Residual income	$___________		$_________		$________

b. Which division has the most residual income?

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