Assume Division 1 of the XYZ Company Had the Following

Multiple Choice

Assume division 1 of the XYZ Company had the following results last year (in thousands) . Management's required rate of return is 8% and the weighted average cost of capital is 6%. Its effective tax rate is 30%.
$$\begin{array} { | l | r | } \hline \text { Sales } & \$ 5,000,000 \\\hline \text { Operating income } & \$ 1,000,000 \\\hline \text { Total assets } & \$ 10,000,000 \\\hline \text { Current liabilities } & \$ 500,000 \\\hline\end{array}$$ What is the division's residual income?

A) $100,000
B) $200,000
C) $500,000
D) $800,000