Answer the Following Questions Using the Information Below:
Care Inc

question 9

Multiple Choice

Answer the following questions using the information below:
Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results:
$$\begin{array} { l r r } & \text { North } & \text { South } \\\text { Sales } & \$ 6,000,000 & \$ 5,000,000 \\\text { Operating income } & 1,500,000 & 1,200,000 \\\text { Taxable income } & 1,200,000 & 700,000 \\\text { Investment } & 14,000,000 & 10,000,000\end{array}$$ The company's desired rate of return is 10%. Income is defined as operating income.
-What are the respective residual incomes for the North and South Divisions?

---

Definitions:

Nominal Rates

Interest rates or rates of return on investment that have not been adjusted for inflation, representing the face value of financial instruments.

Effective Rates

The actual interest rate that a borrower pays on a loan or receives on a deposit, taking into account the compounding of interest.

Coupon Rates

Coupon Rates are the annual interest rates paid by bond issuers on the bond's face value, distributed typically in semi-annual payments.

Floating-Rate Bonds

Bonds with interest rates that adjust periodically based on a reference interest rate or index, protecting investors from interest rate risk.