James Webb Is the General Manager of the Industrial Product

Multiple Choice

James Webb is the general manager of the Industrial Product Division,and his performance is measured using the residual income method.Webb is reviewing the following forecasted information for his division for next year: (CMA adapted) If the cost of capital is 15% and Webb wants to achieve a residual income target of $2,000,000,what will costs have to be in order to achieve the target?

A) $9,000,000
B) $10,800,000
C) $25,150,000
D) $25,690,000