Question: The Western Division of Claremont Company had net operating income
The Western Division of Claremont Company had net operating income of $135,000 and average invested assets of $560,000. Claremont has a required rate of return of 15 percent. Western has an opportunity to increase operating income by $12,000 with a $108,000 investment in assets. Compute Western Division’s return on investment and residual income currently and if it undertakes the project.
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