You are trying to determine which of two retail clothing stores would be a more beneficial investment to you. You have a minimum required rate of return of 7 percent and have collected the following information about the two retail clothing stores:

Required
Calculate the ROI and residual income for each store. Explain the meaning of yourcalculations.

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Sales Net operating income Average operating assets Company A $800,000 50,000 500,000 Company B $900,000 70,000 800,000