A company has a minimum cost of capital of 20%. Thecompany reported income of $3,800, sales of $60,000 andan investment base in assets of $25,000. Calculate theresidual income.O $1,200O $ 8,200O $1,200O$-8,200O Other:

Residual income is a financial performance metric that is used to evaluate how well a business earns…

Answered: A company has a minimum cost of capital…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Division D of Saunders Company has sales of $350,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. The profit margin for Division D is a. 49.1% b. 42.9% c. 83.4% d. 65.7%
Pine Corp. has revenues of $520,000 resulting in an operating income of $66,560. Invested assets total $611,000. Residual income is $24,000. Calculate the new residual income if sales increase by 10% and the profit margin and invested assets remain the same. (Do not round your intermediate calculations.) A $0 B $30,656 C $42,560 D $10,496
The following information pertains to Travis Concrete: Sales revenue $2,000,000 Gross margin 700,000 100,000 550,000 Income Invested capital The company's imputed interest rate is 8%. The capital turnover is: Multiple Choice 27.50. 3.64. 20.00.
The Consumer Division of Lewandowski Company has income from operations of $93,950 and assets of $367,000. The minimum acceptable return on assets is 8%. What is the residual income for the division?$fill in the blank 1
A company has net income of $300,000, net sales of $2,500,000, and total assets of $2,000,000. Its return on total assets equals a. 6.7%. c. 8.3%. e. 15.0%. b. 12.0%. d. 80.0%.
Polymer Coating Enterprises has an operating income of $100,000 on revenues of $1,000,000. Average invested assets are $500,000 and the Company has an 8% cost of capital. What is the residual income?
Assume a company had net operating income of $300,000, sales of $1,500,000, average operating assets of $1,000,000, and a minimum required rate of return on average operating assets of 10.00%. The company's residual income is closest to: Multiple Choice $100,000. $200,000. $150,000. $250,000.
Mason Corporation had $1,030,000 in invested assets, sales of $1,283,000, operating income amounting to $234,000, and a desired minimum return on investment of 12%. The investment turnover for Mason Corporation is Оа. 1.87 b. 1.25 Oc. 1.49 Od. 1.00
Mason Corporation has three business segments: paint, wallpapers, and tools. The company's assumed cost of capital is 12%. Financial information about each segment follows. Paint Segment Wallpaper Segment Tools Segment Paint Segment Wallpaper Segment Tools Segment Segment operating income $650,000 $475,000 $900,000 Invested capital 8,500,000 2,500,000 7,500,000 Calculate the residual income for Paint Segment. A. - $370,000 B. $0.076 C. $13.077 D. - $7,850 E. none of the above
Kyle Corporation provides the following information for the Product Division and Service Division for the year. Product Division Service Division 420,000 $ 650,000 195,000 245,000 640,000 610,000 14.0% 14.0% Net sales Operating income Average total assets Target rate of return $ Requirement 1. Calculate the return on investment for each division. (Enter answers as a percent rounded to the nearest hundredth percent, X.XX%) The return on investment for the Product Division is The return on investment for the Service Division is Requirement 2. Which division has the highest ROI? % % Requirement 3. Calculate the residual income for each division. (Round answers to the nearest whole dollar.) The residual income for the Product Division is The residual income for the Service Division is Requirement 4. Which division has the highest residual income?
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Assume that Division Blue has achieved a yearly operating income of $162,000 using $973,000 of invested assets. If management has set a minimum acceptable return on investment of 7%, the residual income is a. $75,112 b.$112,668 c.$93,890 d.$162,000

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A company has a minimum cost of capital of 20%. The company reported income of $3,800, sales of $60,000 and an investment base in assets of $25,000. Calculate the residual income. O $1,200 O $8,200 $-1,200