Plamba Corporation had $250,000 in invested assets,sales of $490,000,income from operations amounting to $70,000,and a desired minimum rate of return of 15%.The residual income for Plamba is:
A)$32,500.
B)$10,500.
C)$59,500.
D)$37,500.

Question

Quizplus · Accepted Answer

Residual income = Income from operations - (Desired rate of return * Invested assets)= $70,000 - (15% * $250,000)= $70,000 - $37,500= $32,500

Plamba Corporation Had $250,000 in Invested Assets,sales of $490,000,income from Operations