Division B Had an ROI Last Year of 15

question 18

Multiple Choice

Division B had an ROI last year of 15%.The division's minimum required rate of return is 10%.If the division's average operating assets last year were $450,000,then the division's residual income for last year was:

• A)$67,500
• B)$22,500
• C)$37,500
• D)$45,000

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Definitions:

Investments

Investments refer to assets purchased with the intention of generating income or appreciation, including securities like stocks and bonds, real estate, or other vehicles.

FASB

Financial Accounting Standards Board, an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Fair Value

This is the estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.