The sales, income from operations, and invested assets for each division of Wren Co. are as follows: Income from - Invested assets Sales - operations - assets Division C $5,000,000 $630,000 $4,000,000 Division D 6,800,000 760,000 3,900,000 Division E 3,750,000 750,000 7,500,000 Management has established a minimum rate of return for invested assets of 10%

1. Determine the residual income (RI) for each division

2. Based on residual income, what of the division is the most profitable

3. Looking at these three divisions, does the division with the highest residual income have the highest rate of return on invested assests (ROI)?

4. Is it always true that the divsion with the highest RI will have the highest ROI? Why or why not?

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