A. Operating income does not take into account the imputed interest rate on the assets of the investment center. See the correct answer for a complete explanation.

B. Residual income is the amount of return after a certain required return on the assets in use by the division. The calculation of the required return is based on an imputed interest rate for the cost of funds represented by the assets in use. This describes the situation in the question.

C. Return on investment is calculated as income divided by the invested amount. There is no deduction of an imputed interest rate in the calculation of return on investment.

D. Return on assets does not take into account the imputed interest rate on the assets of the investment center. See the correct answer for a complete explanation.