Question
Residual Income The operating income and the amount of invested assets in each division of Otte Industries are as follows: Operating Income Invested Assets Retail
Residual Income The operating income and the amount of invested assets in each division of Otte Industries are as follows: Operating Income Invested Assets Retail Division $52,000 $260,000 Commercial Division 165,000 750,000 Internet Division 152,500 610,000 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 Operating income $52,000 $165,000 $152,500 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income? Internet Division
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