The Pasta Division of Whole Grain Corporation Had Sales of $5,500,000

Multiple Choice

The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year.The total assets of the Pasta Division were $2,750,000,while current liabilities were $330,000.Whole Grain Corporation's target rate of return is 12%,while its weighted average cost of capital is 8%.The effective tax rate for the company is 30%.
What is the Pasta Division's Residual Income (RI) ?

A) $1,045,000
B) $768,900
C) $1,155,000
D) $330,000