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Residual income

The Hum Division of the Ho Company reported the following data for last year:

Sales $800,000
Operating expenses $650,000
Interest expense $50,000
Tax expense $30,000
Stockholders' equity $200,000
Average operating assets $600,000
Minimum required rate of return 12%

9(b). The residual income for the Hum Division last year was:

9(c). The return on investment last year for the Hum Division was:

*Please see attachment for file table.

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Practice Problem 9

The Hum Division of the Ho Company reported the following data for last year:

Sales $800,000
Operating expenses $650,000
Interest expense $50,000
Tax expense $30,000
Stockholders' equity $200,000
Average operating assets $600,000
Minimum required rate of ...

Solution Summary

This gives the steps to compute the residual income

$2.19