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The directors of Donny Co are reviewing the performance of two of its divisions. The following information is available for the year ending 31 March 2009,South division
Sales 50,000
Operating profit 700
Capital employed 3,500
North division
Sales 3,200
Operating profit 840
Capital employed 4,000
South division is a food retailer that sells low priced food from a number of stores that are rented on short-term contracts. North division sells luxury motor vehicles, which it manufactures in a fully automated production plant.
Required:
Calculate the following performance measures for the two divisions (to 1 decimal place):
South division North division
Required:
Residual income: ??
There is not point in typing out a full question and expecting to be provided with a full answer!!
You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
The question as you have typed it is impossible anyway because the rate of interest is not there.
Residual income is explained in my free lectures. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
I have same problem there is no interest rate but in the answer they take 12% without mentioning in the question
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