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    Residual Income and Return on investment (ROI)

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    For the period just ended, Price Corporation's Ohio Division reported profit of $49 million and invested capital of $350 million. Assuming an imputed interest rate of 16%, which of the following choices correctly denotes Ohio's return on investment (ROI) and residual income?

    ROI Residual Income
    A. 14% $7 million
    B. 14% $(7) million
    C. 16% $7 million
    D. $7 million 14%
    E. none of the above choices shows both correct ROI and residual income.

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    Solution Summary

    The solution explains how to calculate the return on investment (ROI) and residual income