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Finch Corporation has a desired rate of return of 7 percent. William Tobin is in charge of one of Finch’s three investment centers. His center controlled operating assets of $2,400,000 that were used to earn $272,000 of operating income. Required Compute Mr. Tobin’s residual income.

Finch Corporation has a desired rate of return of 7 percent. William Tobin is in charge of one of Finch’s three investment centers. His center controlled operating assets of $2,400,000 that were used to earn $272,000 of operating income. Required Compute Mr. Tobin’s residual income.

FINANCIAL ACCOUNTING
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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Finch Corporation has a desired rate of return of 7 percent. William Tobin is in charge of one of Finch’s three investment centers. His center controlled operating assets of $2,400,000 that were used to earn $272,000 of operating income.

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Compute Mr. Tobin’s residual income.

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Step 1

Residual income indicates the extra flow of income over the initial investment. It is the excess of income over the minimum required rate of return. It indicates the remaining amount available after paying out all the expenses and interest. Resident income includes royalty and dividend income. etc.

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