ABC IncHas the Following Information Available for One of Its Divisions

question 114

Multiple Choice

ABC Inc.has the following information available for one of its divisions:
$\begin{array}{lr} \text { Average operating assets} &\$5000000\\ \text { Return on investment (ROI) } &4\%\\ \text { Sales } &\$8000000\\\end{array}$

If ABC requires a minimum return on its investments of 25 per cent,what is their residual income?

• A) $1 950 000
• B) $4 500 000
• C) $6 750 000
• D) $ 750 000

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Definitions:

Milliliters

A unit of volume in the metric system, equivalent to one thousandth of a liter.

Centimeters

A unit of length in the metric system equal to one hundredth of a meter, commonly used to measure small distances.

Copper Penny

A coin made primarily of copper, often used colloquially to refer to one cent coins in the United States and other countries.