1. The Sophie Division of the JR Corporation reported an ROI of 16% based on revenues of $400,000. The investment turnover is 2. What is the residual income if the hurdle rate is 9%?

2. Silly Dog has the following results last year:

Sales $1,250,000

Average Invested Assets $750,000

Minimum Required Rate of Return (Hurdle Rate) 12%

Residual Income $10,000

Silly Dog expects that its Average Invested Assets will remain at $750,000 this year. If Silly Dog also maintains the same profit margin percentage as it did last year, what level of sales must Silly Dog obtain to earn a residual income to $45,000?