The Following Information Has Been Gathered for the Brake Division

question 75

Multiple Choice

The following information has been gathered for the Brake Division:
$$\begin{array} { l r } \text { Sales } & \$ 420,000 \\\text { Operating income } & \$ 75,000 \\\text { Average eurrent assets } & \$ 260,000 \\\text { Cost of capital } &12\% \\\text { Return on investment } & 15 \%\end{array}$$
What is the Brake Division's residual income?

• A) $15,000.
• B) $22,500.
• C) $18,750.
• D) $48,000.

---

Definitions:

Minor

An individual under the legal age of adulthood, often considered as under 18 years old in many jurisdictions.

Majority

More than half of a group or quantity, often used to describe the greater part or number in a community or collection of items.

Disaffirm

To reject, refuse to accept, or declare a contract void, often used in the context of minors’ capacity to enter into contracts.

Necessary

Essential or required for a particular purpose, without which the objective cannot be achieved.