Answer:
a, Residual income = $48,000
b, Average Operating Assets = $2,300,000
c, Net Operating Income = $410,000
d, Minimum required return = 16%
Explanation:
Given that:
- Net operating income: $410,000
- Sales: $2,100,000.
- Required rate of return: 16% = 0.16
- Average operating assets: $2,300,000
a, As we know that, residual income for the year is calculated as:
Residual income = Net operating income - Imputed cost of capital
<=> Residual income = $410,000 - 16% x 2,300,000
<=> Residual income = $42,000
b, Average Operating Assets = $2,300,000
c, Net Operating Income = $410,000
d, Minimum required return = 16%
