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Residual Income and Return on investment (ROI)

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.

Solution Summary

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

$2.19