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Compute the return on investment and residual income

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Reference no: EM133060984

Question - Pool Accessories, Inc., has two divisions-Furniture and Supplies. Segmented income statement information for the most recent fiscal year ended December 31 is shown as above. Assume the Furniture division had average operating assets totaling $6,500,000 for the year, and the Supplies division had average operating assets of $1,750,000. Assume the cost of capital rate is 10%.

Required - Compute the Return on investment (ROI) and Residual income (RI) for each division?

Reference no: EM133060984

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