Question - Residual Income Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last year's results:
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Adams Division
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Jefferson Division
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Net (after-tax) income
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$701,800
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$340,200
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Total capital employed
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4,440,000
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3,412,500
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In addition, Washington Company's top management has set a minimum acceptable rate of return equal to 9%. Required: Enter negative values as negative numbers.
1. Calculate the residual income for the Adams Division.
2. Calculate the residual income for the Jefferson Division.