What is lynchburg residual income


Problem: Information for Lynchburg division is as follows:

Net earnings for division $20,000
Asset base for division $50,000
Target rate of return 13%
Operating income margin 12%
Weighted average cost of capital 8%

What is Lynchburg's residual income?

  • $13,500
  • $14,000
  • $16,000
  • $47,600

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