If profit after tax is $800 000,taxation is $230 000,the required rate of return is 12% and the investment is $3 000 000 the residual income calculation is:

Question

Quizplus · Accepted Answer

Residual income = Profit after tax - (Required rate of return x Investment)
Residual income = $800,000 - (12% x $3,000,000) - $230,000
Residual income = $800,000 - $360,000 - $230,000
Residual income = $210,000
Therefore, the correct option is A, which is $670,000.

If Profit After Tax Is $800 000,taxation Is $230 000,the