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Rooney Home Maintenance Company earned operating income of $6,343,800 on operating assets of $58,200,000 during Year 2. The Tree Cutting Division earned $1,208,910 on
Rooney Home Maintenance Company earned operating income of $6,343,800 on operating assets of $58,200,000 during Year 2. The Tree Cutting Division earned $1,208,910 on operating assets of $6,830,000. Rooney has offered the Tree Cutting Division $2,130,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $428,130. Rooney has a desired return on investment (ROI) of 8.90 percent. Required a. Calculate the return on investment for Rooney, the Tree Cutting Division, and the additional investment opportunity. b. Calculate the residual income for Rooney, the Tree Cutting Division, and the additional investment opportunity. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the residual income for Rooney, the Tree Cutting Division, and the additional investment opp Rooney Home Maintenance Company Tree Cutting Division Additional investment opportunity Residual Income < Required A Required B
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