Residual income is the difference between:
A)net operating income and the minimum profit the organization must earn to cover the ROI.
B)net operating income and the minimum acceptable profit.
C)net operating income and the hurdle rate.
D)net operating income times the hurdle rate,less average invested assets.

Question

Quizplus · Accepted Answer

Residual income is the income that remains after deducting a minimum return on investment, also known as the cost of capital or minimum acceptable profit. Therefore, it is the difference between net operating income and the minimum acceptable profit.

Residual Income Is the Difference Between