Zylex Corporation has multiple factories across the United States. The upper management at Zylex evaluates each factory based on the capital turnover ratio from the DuPont system. Below is information for the factory in Pennsylvania for the past year.

Sales	$	2,500,000
Operating expenses		750,000
Total assets		6,250,000
Accumulated depreciation		1,250,000

a.	Compute the ROI for the Pennsylvania factory using (1) total assets and (2) assets net of depreciation.

(1)	Total assets		%
(2)	Assets net of depreciation		%

b.

Find residual income if the company expects an 20 percent return on total assets

Residual income