The following information is available about the Appliance Division of Rainier Company.Rainier requires a return of 9% from all divisions. Appliance Division Earnings from Operations$18,462,000 Appliance Division Sales$112,600,000 Appliance Division Identifiable Assets$173,700,000 Required:a. Compute the ROI for the Appliance Division.b. Compute the residual income for the Appliance Division.
What will be an ideal response?
a. ROI = $18,462,000/$173,700,000 = 10.63%
b. $18,462,000 ? (9% × $173,700,000) = $2,829,000.
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