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. Trucking Division Seafood Division Construction Division Sales $1,100,000 $720,000 $900,000 Operating assets 550,000 240,000 320,000 Net operating income 106,000 56,000 59,000 (a) Compute the return on investment for each division. (Round answers to three decimal places.)

(b) Compute the residual income for each division.

Residual Income	Trucking	Seafood	Construction
Net operating income
Minimum level
Residual income