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Calculate the residual income of division three

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Question 1: Calculate the residual income of Division 3 if they make the new investment. Count the new investment as having been made at the beginning of the year. Would you expect the head of Division 3 to make the new investment if division heads are evaluated based on residual income? Explain.

Division 3 ROI 9.5%

Invested Assets Average $240,000,000

Net Income $38,400,000

ROI $22,800,000

Residual Income $15,600,000

Reference no: EM132566919

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