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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

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 $132,000 $660,000
Commercial Division 143,000 650,000
Internet Division 67,200 420,000

Assume that management has established a 8% minimum acceptable return for invested assets.

a. Determine the residual income for each division.

Retail Division Commercial Division Internet Division
Income from operations $132,000 $143,000 $67,200
Minimum acceptable income from operations as a percent of invested assets
Residual income $ $ $

b. Which division has the most residual income?

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