Residual income is the difference between the divisional income and the cost of invested capital required to operate the division.

Name: Residual income is the difference between the divisional income and the cost of invested capital required to operate the division.
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Residual income is calculated by subtracting the cost of capital from the divisional income, representing the income generated above the minimum required return on investment.

Residual Income Is the Difference Between the Divisional Income and the Cost