The income from operations and the amount of invested assets in each division of

Question

The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division Commercial Division Internet Division Assume that managment has established a 10% minimum acceptable return for invested assets. $170,100 77,400 130,900 $810,000 430,000 770,000 a. Determine the residual income for each division Retail Division Commercial Division Internet Division Income from operations Minimum acceptable income from operations as a percent of invested assets Residual income b. Which division has the most residual income? $170,100 $77,400 $130,900

Explanation / Answer

a) Residual income :

b) Retail division has the most residual income

Retail division Commercial division Internet division Income from operations 170100 77400 130900 Minimum acceptable income from operations as a percent of invested assets 81000 43000 77000 Residual income 89100 34400 53900

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