Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information
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Question:
Residual Income
Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:
Adams DivisionJefferson DivisionNet (after-tax) income$617,100$362,250Total capital employed4,240,0003,640,000
In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 7%.
Required:
Enter negative values as negative numbers.
1.Calculate the residual income for the Adams Division.
$
2.Calculate the residual income for the Jefferson Division.
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