Question

Chicks Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $302,500, and a desired minimum return of 15%.

The residual income for Chicks is

Answer 1

The answer is $137500

Step-by-step explanation:

Solution

Recall that:

Chicks corporation had invested assets of =$1,100,000

Sales of = $1,210,000,

Income from operations resulting to = $302,500

Desired minimum return = 15%

Chicks residual income is =?

Now,

Particulars Amount

Net Income 302500

Less: Minimum Return

(1100000 x 15%) 165000

Residual Income 137500

Therefore the residual income for chicks is $137500