Residual Income (LO 2, 4)
Refer to the data for problem’ 13–36 regarding Long Beach Pharmaceutical Company.
Required: Compute each division’s residual income for the year under each of the following assumptions about the firm’s cost of acquiring capital.
1. 12 percent.
2. 15 percent.
3. 18 percent.
Which division was more successful? Explain your answer.
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