The Babbel division of Bandeni Company had operating income last year of $152,250 and operating assets of

Question:

The Babbel division of Bandeni Company had operating income last year of $152,250 and operating assets of $2,175,000. Bandeni's minimum acceptable rate of return is 8 percent.
Required:
1. Calculate the residual income for the Babbel division.
2. Was the ROI for the Babbel division greater than, less than, or equal to 8 percent?