Far Sight is a division of a major corporation. The following data are for the latest year of operations:                  Sales $24,480,000 Net operating Income $1,738,080 Average operating assets $6,000,000 The company’s minimum required rate of return 16% Required: a. What is the division's return on investment (ROI)? b. What is the division's residual income?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Far Sight is a division of a major corporation. The following data are for the latest year of operations:                 

Sales

$24,480,000

Net operating Income

$1,738,080

Average operating assets

$6,000,000

The company’s minimum required rate of return

16%

Required:

a. What is the division's return on investment (ROI)?
b. What is the division's residual income? 
 

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