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Residual Income The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested
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Residual Income
The income from operations and the amount of invested assets in each division of Beck Industries are as follows:
Income from Operations Invested Assets Retail Division $98,800 $520,000 Commercial Division 134,300 790,000 Internet Division 87,400 380,000 Assume that management has established a 12% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
Retail Division Commercial Division Internet Division Income from operations $98,800 $134,300 $87,400 Minimum acceptable income from operations as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income? Internet Division
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