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Question(s) / Instruction(s):

A divisional manager receives a bonus based on 10% of the residual income from the division. During the current year, the division reported revenues of $1,000,000 and expenses of $500,000. The division had $2,000,000 in average operating assets. The minimum required rate of return for the division was 15%. What was the amount of the manager's bonus?

A) $50,000

B) $30,000

C) $20,000

D) $55,000

 

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