Which of the following is the formula for calculating residual income?
A)Operating income - average assets
B)Operating income plus interest and depreciation expense
C)Operating income - average assets x required minimum rate of return
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

Residual income is the income that remains after deducting the cost of capital from the operating income. The formula for calculating residual income is operating income minus a minimum required rate of return multiplied by average assets. So, option C is the correct formula for calculating residual income.

Which of the Following Is the Formula for Calculating Residual