Answer: Division's Residual Income (RI) is 10,50,000.
Explanation:
Management's target rate of return = 20%
Operating income = 1,250,000
Total assets = 1,000,000
Current liabilities - 750,000
∴ Residual income = Net operating income - (Total assets × Target rate of return)
= 1250000 - (1,000,000 × 20%)
= 1250000 - 200000
= 10,50,000
So, division's Residual Income (RI) is 10,50,000.