Rains Nickless Ltd. of Australia has two divisions that operate in Perth and Darwin. Selected data on the two divisions follow:Division Perth Darwin Sales$10,000,000 $30,000,000 Net operating income$700,000 $2,700,000 Average operating assets$2,000,000 $15,000,000 Required:1.Compute the return on investment (ROI) for each division. Perth DarwinROI % %2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division. Perth DarwinAverage operating assetsNet Operating incomeMinimum required return on average assetsResidual income3. Is the Darwin Division’s greater residual income an indication that is better managed?Yes/No?Midlands Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of Â£440,000 on sales of Â£2,100,000. The companyâ€™s average operating assets for the year were Â£2,300,000 and its minimum required rate of return was 11%. (The currency in the United Kingdom is the pound, denoted by Â£.)Required:Compute the companyâ€™s residual income for the year.Average operating assetsNet operating incomeMinimum required returnResidual income
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