Which of the following is the correct formula for calculating residual income (RI)?
A)Weighted average cost of capital - Net operating profit after tax
B)Operating income - Minimum acceptable operating income
C)Historical cost of assets - Accumulated depreciation
D)Operating income ÷ Average assets

Question

Quizplus · Accepted Answer

Residual income is calculated as the operating income minus the minimum acceptable operating income, which is typically determined by multiplying the required rate of return by the average operating assets.

Which of the Following Is the Correct Formula for Calculating