Assume the Apple Division of the Gala Company Had the Following

Multiple Choice

Assume the Apple division of the Gala Company had the following results last year (in thousands) . Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%.

- What is Apple division's residual income?

A) $50,000
B) $140,000
C) $336,000
D) $360,000