The Television Division of Electronics Corporation has the following segment information: Assets available for use $2,500,00 Target rate of return 12% Residual income $ 300,000 What was Television Division's return on investment?
a. 12%
b. 10%
c. 24%
d. 20%
C
ROI = Income / Assets Invested
Income = Residual Income + (Target Rate * Assets)
= $300,000 + (.12 * $2,500,000)
= $600,000
ROI = $(600,000/2,500,000)
= 24%
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