Residual Income The income from operations and the amount of invested assets in

Question

Residual Income 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 $149,100 $710,000 Commercial Division 110,200 580,000 Internet Division 100,300 590,000 Assume that management has established a 12% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $149,100 $110,200 $100,300 Minimum acceptable income from operations as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income? Retail Division

Explanation / Answer

Retail Division Commercial Division Internet Division Income from operations 149100 110200 100300 Minimum amount of income from operations 85200 69600 70800 Residual income 63900 40600 29500 Retain division has the most residual income

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