A company has total assets of $500,000, a required rate of return of 10%, and operating income for the year was $200,000.What is the residual income?
A)$150,000
B)$200,000
C)$250,000
D)$480,000
E)$175,000

Question

Quizplus · Accepted Answer

Residual income is calculated as operating income minus the product of total assets and the required rate of return. Here, it is $200,000 - ($500,000 * 10%) = $200,000 - $50,000 = $150,000.

A Company Has Total Assets of $500,000, a Required Rate