Question: Residual Income The Tuxedo Division of Shamus O'Toole Company had operating income last year of $340,000 and average operating assets of $3,500,000. O'Toole's minimum acceptable rate of return is 7 percent.
Required: 1. Calculate the residual income for the Tuxedo Division.
2. Was the ROI for the Tuxedo Division greater than, less than, or equal to 7 percent?