Exercise 11-6 (Static) Contrasting Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Tan Corporation of Japan
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Exercise 11-6 (Static) Contrasting Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka $ 3,000,000 $ 210,000 $ 1,000,000 Yokohama $ 9,000,000 $ 720,000 $ 4,000,000 Sales Net operating income Average operating assets Required: 1. For each division, compute the return on investment (ROI). 2. Compute the residual income for each division assuming the company's minimum required rate of return is 15%.
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