Residual Income

The Orlon Division of Mondragon Company had operating income last year of $$118,000$ and average operating assets of $$1,900,000.$ Mondragon's minimum acceptable rate of return is $7\%.$

Required:

Enter negative values as negative numbers.

Calculate the residual income for the Orlon Division.

$

Was the ROI for the Orlon Division greater than, less than, or equal to $7\%?$

Less than $7\%$