Forchen, Inc., requires an 8 percent minimum rate of return. Required: 1. Calculate residual income for the

Question:

Forchen, Inc., requires an 8 percent minimum rate of return.
Required:
1. Calculate residual income for the Small Appliances Division.
2. Calculate residual income for the Cleaning Products Division.
3. What if the minimum required rate of return was 9 percent? How would that affect the residual income of the two divisions?