Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets of $300000. The required rate of return for the company is 15%. What is the division's residual income? a. $240000 b. $45000 c. $15000 d. $51000 2. If the manager of Roy To division is evaluated based on residual income, will she want to make an investment of $100000 that would generate an additional net operating income of $18000 per year? a. Yes b. No
Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets of $300000. The required rate of return for the company is 15%. What is the division's residual income? a. $240000 b. $45000 c. $15000 d. $51000 2. If the manager of Roy To division is evaluated based on residual income, will she want to make an investment of $100000 that would generate an additional net operating income of $18000 per year? a. Yes b. No
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets of $300000. The required rate of return for the company is 15%. What is the division's residual income?
a. $240000
b. $45000
c. $15000
d. $51000
2. If the manager of Roy To division is evaluated based on residual income, will she want to make an investment of $100000 that would generate an additional net operating income of $18000 per year?
a. Yes
b. No
a. Yes
b. No
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