Williamson Group operates a chain of bookstores. A recent business expansion plan resulted in the opening of more than 25 new stores. The Upland store has one feature that the Stowe store does not have€”a small coffee shop. Early indications are that the coffee shop has driven up the location€™s revenues and profits. Operating data for two of these stores is provided below:

Required
A. Calculate net operating income and residual income for each division.
B. Compare the two divisions and discuss the usefulness of ROI and residual income for the purpose of comparing thedivisions.

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Upland Stowe ROI Net operating income Minimum required return Average operating assets Residual income 18.75 % 14 .0 % 15% 15% $200,000 150,000