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The Residual Income of Lynchburg Division

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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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The expert examines residual income for the Lynch Burg Division. A step-by-step tutorial showing how to calculate residual income is provided.

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