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Evaluate: The Required Rate of Return

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Question: The Consumer Products Division of Goich Corporation had average operating assets of $782,000 and a net operating income of $89,300 in May. The minimum required rate of return for performance evaluation purposes is 9%. What was the Consumer Products Division's residual income in May?

$18,920
$20,220
-$18,920
-$20,220.

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Solution Summary

In a very brief, but concise solution, this response provides the necessary equation required to solve for residual income. All calculations are completed.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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