Answer:
$360
Explanation:
We can compute net income to be
The ending balance of retained earnings = Beginning balance of retained earnings + net income - dividend paid.
Where,
Dividend = $482
Change in retained earnings = $122
Hence,
Net income = Dividend - Change in retained earnings
= $482 - $122
Net income = $360
Answer:
ROI 15%
Residual Income $1,350,000
Explanation:
Residual Income is the difference between net income of the company and the required rate of return. It determines the excess of income generate than the minimum return. The formula to calculate the residual income is,
RI = Net operating Income - (Required rate of return * Cost of operating assets)
RI = $4,500,000 - (21% * $15,000,000 )
RI = $1,350,000
ROI = 
Capital Employed = Sales - Average operating assets
ROI = 15%
Residual income is positive when the department has meet the minimum return requirement. Minimum return is the return that is required by the company stakeholders. The particular projects and activities are selected on the basis of residual income.
False i believe is the correct answer,
Answer:
For Loan A = 3.170%
For Loan B = 3.174%
Loan B has a higher effective annual rate.
Explanation:
The computation of effective annual rates for the loans is shown below:-
For Loan A
We will assume effective annual rate is a
Stated rate(r) = 3.125% compounded monthly
= Number of periods in an year n = 12
So,
(1 + a) = (1 + r ÷ n) × n
= a = (1+0.03125 ÷ 12) × 12 - 1
= 0.03170
or
= 3.170%
For Loan B
We will assume the effective annual rate is b
Stated rate (r) = 3.15% compounded semi annually
= Number of periods in an year n = 2
So
(1 + a) = (1 + r ÷ n) × n
= a = (1 + 0.0315 ÷ 2) × 2 - 1
= 0.03174
or
= 3.174%
From the above calculation we can see that Loan B, is greater than Loan A and has a higher effective annual rate.
