The Box Manufacturing Division of the Allied Paper Company Reported

Multiple Choice

The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 7%. Management calculated a weighted-average cost of capital (WACC) of 3%. Allied's corporate tax rate is 35%. What is the division's Residual Income (RI) ?

A) $175,000
B) $98,000
C) $235,000
D) $224,000