Black Sea Company has two divisions,the Old Division and the New Division.Last year,the Old Division earned $66,000 using average operating assets of $550,000.Last year,the New Division earned $260,000 using average operating assets of $2,000,000.Minimum required rate of return for Black Sea is 9%.
Now assume that the minimum required rate of return for Black Sea is 12%.
A. For the Old Division, residual income is_____
B. For the New Division, residual income is_____ C. For the Old Division, residual income is_____
D. For the New Division, residual income is_____

Question

Black Sea Company has two divisions,the Old Division and the New Division.Last year,the Old Division earned $66,000 using average operating assets of $550,000.Last year,the New Division earned $260,000 using average operating assets of $2,000,000.Minimum required rate of return for Black Sea is 9%.
Now assume that the minimum required rate of return for Black Sea is 12%.
 A. For the Old Division, residual income is_____
B. For the New Division, residual income is_____ C. For the Old Division, residual income is_____
D. For the New Division, residual income is_____

Quizplus · Accepted Answer

The Answer of Black Sea Company has two divisions,the Old Division and the New Division.Last year,the Old Division earned $66,000 using average operating assets of $550,000.Last year,the New Division earned $260,000 using average operating assets of $2,000,000.Minimum required rate of return for Black Sea is 9%.
Now assume that the minimum required rate of return for Black Sea is 12%.
 A. For the Old Division, residual income is_____
B. For the New Division, residual income is_____ C. For the Old Division, residual income is_____
D. For the New Division, residual income is_____

Black Sea Company Has Two Divisions,the Old Division and the New