ME11 Problem: ROI & Residual Income – Divisional Income

ME11 Problem: ROI & Residual Income – Divisional Income

The following two divisions, Division I and II, annual results are as follows:Division I Division IIAssets employed $1,000,000$3,000,000 Net income $180,000$420,000 Required:1. Calculate ROI for each division.2. Calculate residual income assuming the minimum required rate of return is:a) 12% b) 15%c) 17%