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Residual Income The operating income and the amount of invested assets in each division of Conley...

Residual Income

The operating income and the amount of invested assets in each division of Conley Industries are as follows:

Operating income Invested Assets
Retail Division $176,400 $840,000
Commercial Division 112,700 490,000
Internet Division 96,900 570,000

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
Operating income $176,400    $112,700     $96,900   
Minimum acceptable operating income as a percent of invested assets
Residual income $ $ $

b. Which division has the most residual income?

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