The Pizza Division of Frozen Foods Corporation reported the following results from the past year. Shareholders require a return of

9%. Management calculated a weighted

average cost of capital (WACC) of

7%. The company's corporate tax rate is

40%.

Sales	$500,000
Operating income	175,000
Total assets	$1,600,000
Current liabilities	300,000

What is the division's Residual Income (RI)?

A.

$130,000

B.

$45,000

C.

$175,000

D.

31,000