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Calculate residual income assuming the firm requires return

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Reference no: EM132721602

Sher Manufacturing Pty Ltd has two retail divisions., which have the following reported results for the year:

                                Furnishing department           Dress making Division

Profit                             $5,400,000                            $9,270,000

Average invested Capital 11,250,000                                10,687,500

Problem (i) Calculate the ROI for both divisions

Problem (ii) Calculate residual income assuming the firm requires a return of 12% on invested capital

Problem (iii) Which was the more successful division? Explain.

Reference no: EM132721602

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