Use the following information for the next 3 questions.
Chicago Division has a required rate of return of 15%. The weighted average cost of capital is 10%. Information for Chicago Divisions operations over the past 2 years follows.
-What was the Chicago Division residual income for 20x5?
A) $(12,540)
B) $3,300
C) $15,300
D) $19,800

Question

Use the following information for the next 3 questions.
Chicago Division has a required rate of return of 15%. The weighted average cost of capital is 10%. Information for Chicago Divisions operations over the past 2 years follows. 
-What was the Chicago Division residual income for 20x5?
A) $(12,540) 
B) $3,300 
C) $15,300 
D) $19,800

Quizplus · Accepted Answer

Residual income is calculated as the net operating income minus the product of the minimum required rate of return and the average operating assets. The correct choice is based on the given data and calculations.

Use the Following Information for the Next 3 Questions