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Midlands Design Ltd. of Manchester, England: residual income

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Midlands Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of £410,000 on sales of £1,800,000. The companyâ??s average operating assets for the year were £2,000,000 and its minimum required rate of return was 12%. (The currency in the United Kingdom is the pound, denoted by £.)

Required:

Compute the company's residual income for the year. (Omit the "£" sign in your response.)

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Solution Summary

Your tutorial is in Excel (attached) so you have a template for other similar problems. Click in cells to see computation.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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