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

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. 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