Question & Answer: If operating income is $52,000, average operating assets are $312,000, and the minimum required ra…..

13. If operating income is $52,000, average operating assets are $312,000, and the minimum required rate of return is 15%, what is the residual income? O $57,200 $41,600 O $5,200 O $46,800

If operating income is $52,000, average operating assets are $312,000, and the minimum required rate of return is 15%, what is the residual income? $57, 200 $41, 600 $5, 200 $46, 800

Expert Answer

Solution:-

Residual Income = Net operating Income – (Average operating assets * Minimum required rate of return)

= 52,000 – ( 312000 * 15%)

= 52,000 – 46,800

= 5200

Therefore, the residual Income is $ 5200.

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