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Rundle Home Maintenance Company earned operating income of $6,817,200 on operating assets of $59,800,000 during Year 2. The Tree Cutting Division earned $1,191,900 on operating
Rundle Home Maintenance Company earned operating income of $6,817,200 on operating assets of $59,800,000 during Year 2. The Tree Cutting Division earned $1,191,900 on operating assets of $6,850,000. Rundle has offered the Tree Cutting Division $2,200,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $448,800. Rundle has a desired return on investment (ROI) of 9.40 percent. Required a. Calculate the return on investment for Rundle, the Tree Cutting Division, and the additional investment opportunity. b. Calculate the residual income for Rundle, 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 return on investment for Rundle, the Tree Cutting Division, and the additional investment opportunity. (Round your answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Return on Investment % Rundle Home Maintenance Company Tree Cutting Division Additional investment opportunity % Required a. Calculate the return on investment for Rundle, the Tree Cutting Division, and the additional investment opportunity. b. Calculate the residual income for Rundle, 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 Rundle, the Tree Cutting Division, and the additional investment opportunity. Residual Income Rundle Home Maintenance Company Tree Cutting Division Additional investment opportunity
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