Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $683,650 $330,750 Total capital employed 4,760,000 3,315,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 8%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division. $fill in the blank 1 2. Calculate the residual income for the Jefferson Division. $fill in the blank 2
Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results: Adams Division Jefferson Division Net (after-tax) income $683,650 $330,750 Total capital employed 4,760,000 3,315,000 In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 8%. Required: Enter negative values as negative numbers. 1. Calculate the residual income for the Adams Division. $fill in the blank 1 2. Calculate the residual income for the Jefferson Division. $fill in the blank 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Residual Income
Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:
| Adams Division | Jefferson Division | |||
| Net (after-tax) income | $683,650 | $330,750 | ||
| Total capital employed | 4,760,000 | 3,315,000 |
In addition, Washington Company's top management has set a minimum acceptable
Required:
Enter negative values as negative numbers.
1. Calculate the residual income for the Adams Division.
$fill in the blank 1
2. Calculate the residual income for the Jefferson Division.
$fill in the blank 2
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