If net operating income is $39,000, average operating assets are $351,000, and the minimum required rate of return is 10%, what is the residual income?

A) $42,900
B) $31,200
C) $3,900
D) $35,100

Question

If net operating income is $39,000, average operating assets are $351,000, and the minimum required rate of return is 10%, what is the residual income?A)  $42,900B)  $31,200C)  $3,900D)  $35,100

azmazazabilla paizon · Accepted Answer

Final Answer : C, Explanation :  Residual income is calculated as the net operating income minus the product of the minimum required rate of return and the average operating assets. Here, it is $39,000 - (10% of $351,000) = $39,000 - $35,100 = $3,900.

If net operating income is $39,000, average operating assets are $351,000, and the minimum required rate of return is 10%, what is the residual income?

A) $42,900
B) $31,200
C) $3,900
D) $35,100

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