Assume that management has established a 12% minimum acceptable rate of return for invested assets.
|
|
Income |
|
|
|
from Operations |
Invested Assets |
|
Magazine Division |
$ 96,000 |
$ 800,000 |
|
Textbook Division |
166,400 |
640,000 |
|
Business Publishing Division |
260,400 |
1,240,000 |
a. Determine the residual income for each division.
b. Which division has the most residual income?