Petra Company Has the Following Information Available for One of Its

Multiple Choice

Petra Company has the following information available for one of its divisions:
$\begin{array}{lr}\text { Average operating assets } & \$ 2,500,000 \\\text { Sales } & \$ 4,000,000 \\\text { Return on investment (ROI) } & 40 \%\end{array}$
If Petra's cost of capital is 25%,what is the division's residual income?

A) $1,500,000
B) $1,000,000
C) $375,000
D) $975,000
E) None of the answer choices is correct.