ROI and Residual Income: Basic Computations Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow. Sales $1,200,000 $780,000 $900,000 Operating assets 600,000 260,000 330,000 Net operating income 101,000 60,000 62,000 Compute the residual income for each division. (FILL IN THE BLANKS) Net operating income $101,000 $60,000 $62,000 Minimum level __________ __________ __________ Residual income $__________ $__________ $__________