ROI and Residual Income: Basic Computations Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow.

(a) Compute the return on investment for each division. (Round answers to three decimal places.)

(b) Compute the residual income for each division.

\begin{tabular}{|l|r|r|r|} \hline & Trucking Division & Seafood Division & Construction Division \\ \hline Sales & $1,200,000 & $750,000 & $900,000 \\ \hline Operating assets & 600,000 & 250,000 & 350,000 \\ \hline Net operating income & 116,000 & 66,000 & 63,000 \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Trucking ROI = & 0 \\ \hline Seafood ROI = & 0 \\ \hline Construction ROI = & 0 \\ \hline \end{tabular} \begin{tabular}{|l|cc|cc|cc|} \hline \multicolumn{1}{|c}{ Residual income } & \multicolumn{2}{c}{ Trucking } & \multicolumn{2}{c}{ Seafood } & \multicolumn{2}{c}{ Construction } \\ \hline Net operating income & $ & 0 & $ & 0 & $ & 0 \\ \hline Minimum level & & 0 & 0 & 0 \\ \hline Residual income & $ & 0 & $ & 0 & $ & 0 \\ \hline \end{tabular}