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Assume that Division Blue has achieved a yearly income from operations of $166,000 using $976,000 of invested assets. If management has set a minimum acceptable return of 8%, the residual income is a.$166,
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Assume that Division Blue has achieved a yearly income from operations of $166,000 using $976,000 of invested assets. If management has set a minimum acceptable return of 8%, the residual income is a.$166,000 b.$105,504 c.$70,336 d.$87,920

User Rune Jeppesen
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1 Answer

23 votes
23 votes

Answer:

d.$87,920

Step-by-step explanation:

Residual Income = Net Income - Cost of Investment

therefore

Residual Income = $166,000 - ($976,000 x 8%)

= $87,920

User Nfys
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