Use the Information Below to Answer the Following Question(s)

question 57

Multiple Choice

Use the information below to answer the following question(s) :
The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands) .

Management's target rate of return is 10% and the weighted average cost of capital is 8%. Tandem's effective tax rate is 35%.
-What is the Tandem division's Residual Income (RI) ?

• A) $152,000
• B) $280,000
• C) $320,000
• D) $8,000,000