Question

1. 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	$98,800		$520,000
   Commercial Division	134,300		790,000
   Internet Division	87,400		380,000

   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	$98,800			$134,300			$87,400
   Minimum acceptable income from operations as a percent of invested assets
   Residual income	$			$			$

   b. Which division has the most residual income?
   Internet Division

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Answer 1