Sales Average operating assets. Minimum required rate of return 10% .. $100,000

Question

Sales Average operating assets. Minimum required rate of return 10% .. $100,000 $40,000 18% The residual income would be: (HINT: Use the DuPont formula for ROI to Income.) A.) $2,800 $0 C. $6,000 D. $8,000 14. The following information relates to last year's operations at the B Division: $12,000 $60,000 $300,000 $400,000 Net operating income Sales Average operating assets. $ What was the B Division's minimum required rate of return last year? A. 12% B. 4% C. 15% D. 20% 15-17 A division of a major corporation provided the following data concerni Sales Net operating income $24,000,000 $1,752,000 $6,000,000 15. The division's margin is closest to: A, 32.3%

Explanation / Answer

Solution :-

Formula -1

Minimum Required Return = Net Operating Income - Residual Income

= $ 60000 - $ 12000

Minimum Required Return = $ 48000

Formula - 2

Minimum Required rate of return = Minimum Required Return / Average Operating Assets * 100

= $ 48000 / 400000 * 100

Minimum Required rate of return last year is 12%

The B Division's minimum required rate of return is 12%

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