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The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 5%. Management calculated
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 5%. Management calculated a weighted-average cost of capital (WACC) of 2%. Allied's corporate tax rate is 25%. Sales $300,000 Operating income 60,000 Total assets $1,000,000 Current liabilities 100,000 What is the division's Residual Income (RI)? A) $10,000 B) $40,000 C) $15,000 D) $45,000
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