A division is considering investing in capital equipment costing $2·7m. The useful economic life of the equipment isexpected to be 50 years, with no resale value at the end of the period. The forecast return on the initial investmentis 15% per annum before depreciation. The division’s cost of capital is 7%. What is the expected annual residual income of the initial investment

A．All of the above
B．(i), (ii) and (iii) only
C．(i), (iii) and (iv) only
D．(ii) and (iii) only

A．It calculates the expected cost of a product and then adds a margin to it to arrive at the target selling price
B．It allocates overhead costs to products by collecting the costs into pools and sharing them out according to each product’s usage of the cost driving activity
C．It identifies the market price of a product and then subtracts a desired profit margin to arrive at the target cost
D．It identifies different markets for a product and then sells that same product at different prices in each market