Residual Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Residual Income
Transcribed Image Text:Example: Jesper, Inc. provided the following data on its East and West Divisions for last year:
East Division
West Division
Operating income
$95,000
$220,000
Average operating assets
920,000
2,450,000
ROI
10.33%
8.98%
Jesper requires a 6% rate of return.
The residual income for the East Division is $
The residual income for the West Division is $
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