Question
Selected sales and operating data for three divisions of three different companies are given below: Division A, Company 1 Division B, Company 2 Division C,
Selected sales and operating data for three divisions of three different companies are given below:
| Division A, Company 1 | Division B, Company 2 | Division C, Company 3 | |
| Sales for the Division | $60,000 | $100,000 | $80,000 |
| Income for the Division | $3,000 | $9,000 | $1,800 |
| Capital Invested in the Division | $15,000 | $50,000 | $20,000 |
| Company Hurdle Rate | 15% | 18% | 12% |
Each division is presented with an investment opportunity that would yield a rate of return of 16%.If performance is being measured by Residual Income,which division or divisions will probably accept the opportunity?
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Daniel G Short, George Kanaan, Maureen Sterling
6th Canadian edition
73208140, 1259105695, 978-1259105692
