Question - Izzy Division of Marine Boats Corporation had the following results last year (in thousands):
Sales - $4,500,000
Operating income - $700,000
Total assets - $4,000,000
Current liabilities - $250,000
Management's target rate of return is 10% and the weighted average cost of capital is 8%.
What is the Izzy Divisions's Residual Income (RI)?
A) $300,000
B) $700,000
C) $70,000
D) $400,000