Solution-What is the residual income for division a

What is the residual income for division a

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Reference no: EM132968636

Question - A firm has two divisions, A and B. Information for each division is as follows:

	A	B
Operating income before-tax	$40,000	$130,000
Asset base for division	$100,000	$1,200,000
Current liabilities	$10,000	$100,000
Required rate of return	15%	18%
Return on Sales	10%	20%
Weighted average cost of capital (WACC)	12%	12%
Tax rate	20%	20%

Required - What is the residual income for Division A?

Reference no: EM132968636

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What is the residual income for division a

Reference no: EM132968636

Reference no: EM132968636

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