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Calculate the return on investment

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Reference no: EM131748290

The Jazz Division of Heights Recording Corporation had the following results last year.

Sales$10,000,000
Operating income$2,200,000
Total assets$4,000,000
Current liabilities $2,500,000

Management's target rate of return is 12% and the weighted average cost of capital is 9%. Its effective tax rate is 40%.

Required:

Calculate the return on investment (ROI).

Calculate the residual income.

Reference no: EM131748290

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