Residual Income

Related BrainMass Solutions

• Computing return on investment and residual income

  Y Residual income = $30,000 - ($150,000*.16) Residual income = $30,000 - $24,000 Residual income = $6,000 Division Z Residual income = $10,000 - ($200,000*.08) Residual income = $10,000 - $16,000 Residual income = ($6,000) c.

• Residual income and EVA

  The residual income does not change with the investment. This implies that the residual income is zero for the new investment.

• Calculate Residual Income for Midlands Design Ltd.

  Residual income = Net Operating Income - Average Operating Assets X Minimum Required rate of return Residual income = 400,000 - 2,200,000 X 16% Residual income = 48,000 The solution explains how to calculate residual income

• Problems involving residual Income

  Residual income = Net Operating Income - Average Operating Assets X Minimum required rate of return Residual income = 36,000 - 180,000 X 15% Residual income = 9,000 This solution helps with a problem involving residual income.

• Residual Income and Return on investment (ROI)

  and residual income

• ROI and Residual Incomes

  What is the residual income of each boat using its book value? d. What is the residual income of each boat using its market value? e. Which trawler had the best year?

• Residual Income (RI) be used to overcome ROI drawbacks

  Residual income is another approach to measuring an investment center's performance. When residual income is used to measure managerial performance, the objective is to maximize the total amount of residual income."

• Contrasting ROI and Residual Income

  Assume the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division. 3.

• Residual operating income

  of residual operating income.

• Textron Industries: residual income, ROI, evaluate a plant expansion opportunity

  Calculate the residual income for the proposed investment. The required income = investment * cost of capital = 3000K * 12% = 360 K Then the residual income = annual income - required income = 500 K - 360 K = 140 K$ c.