Excel Division reported a residual income of $200,000 for the year just ended. The division had $8,000,000 of invested capital and $1,000,000 of income. On the basis of this information, the imputed interest rate was:
A) 2.5%.
B) 10.0%.
C) 12.5%.
D) 20.0%.
E) None of the other answers are correct.

Question

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The Answer of Excel Division reported a residual income of $200,000 for the year just ended. The division had $8,000,000 of invested capital and $1,000,000 of income. On the basis of this information, the imputed interest rate was:
A) 2.5%.
B) 10.0%.
C) 12.5%.
D) 20.0%.
E) None of the other answers are correct.

Excel Division Reported a Residual Income of $200,000 for the Year