Division B had an ROI last year of 15%.The division's minimum required rate of return is 10%.If the division's average operating assets last year were $450,000,what was the division's residual income for last year?
A) $22,500.
B) $37,500.
C) $45,000.
D) $67,500.

Question

Quizplus · Accepted Answer

Residual income = (ROI - Required rate of return) * Average operating assets= (15% - 10%) * $450,000= 5% * $450,000= $22,500

Division B Had an ROI Last Year of 15