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13 February, 04:51

Cabell Products is a division of a major corporation. Last year the division had total sales of $11,440,000, net operating income of $686,400, and average operating assets of $2,402,400. The company's minimum required rate of return is 13%. The division's residual income is closest to:Cabell Products is a division of a major corporation. Last year the division had total sales of $11,440,000, net operating income of $686,400, and average operating assets of $2,402,400. The company's minimum required rate of return is 13%. The division's residual income is closest to:

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  1. 13 February, 04:58
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    Residual income=$374,088

    Explanation:

    Calculation for Cabell Products division's residual income

    Formula for Residual income is:

    Residual income = Net operating income - (Average operating assets * Minimum required rate of return)

    Residual income = $686,400 - ($2,402,400*13%)

    Residual Income=$686,400-$312,312

    Residual income=$374,088

    Therefore the division's residual income is closest to:$374,088
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