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11 September, 14:11

If net operating income is $34,000, average operating assets are $204,000, and the minimum required rate of return is 15%, what is the residual income

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  1. 11 September, 14:30
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    The residual income is $3,400.

    Explanation:

    Residual Income is calculated as Profit less Return on investment.

    Net operating income $34,000

    Less Return on Investment ($204,000 * 15%) ($30,600)

    Residual income $3,400

    Conclusion:

    The residual income is $3,400.
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