What is the residual income for a firm with $1 million in total capital, $300,000 in net income, and a 20% cost of capital?
A) $100,000
B) $140,000
C) $240,000
D)$500,000

Name: What is the residual income for a firm with $1 million in total capital, $300,000 in net income, and a 20% cost of capital? A) $100,000 B) $140,000 C) $240,000 D)$500,000
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Question

Quizplus · Accepted Answer

Residual income = net income - (cost of capital × total capitalization)Residual income = $300,000 - (.20 × $1,000,000)Residual income = $100,000

What Is the Residual Income for a Firm with $1