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Thornton Technologies, Inc. has three divisions. Thornton has a desired rate of return of 11.5 percent. The operating assets and income for each division are
Thornton Technologies, Inc. has three divisions. Thornton has a desired rate of return of 11.5 percent. The operating assets and income for each division are as follows: Divisions Printer Copier Fax Operating Assets $ 700,000 970,000 520,000 $ 2,190,000 Operating Income $112,000 100,880 69,160 $282,040 Total Thornton headquarters has $136,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROls: Divisions Printer Copier Fax Expected ROIs for Additional Investments 13.0% 12.0% 11.0% g. Calculate the residual income: (1) At the corporate (headquarters) level before the additional investment. (2) At the division level before the additional investment. (3) At the investment level. (4) At the division level after the additional investment. Complete this question by entering your answers in the tabs below. Req A1 Reg A2 to D Req G1 Req G2 to G4 Calculate the residual income at the corporate (headquarters) level before the additional investment. Residual income * Residual Income (loss) (2) Printer division Copier division Fax division (3) Printer division Copier division Fax division (4) Printer division Copier division Fax division
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