Jefferson Memorial Hospital is an Investment center as a division of Hospitals United. During the past year, Jefferson reported an after-tax Income of $7.2 million. Total Interest expense was $3,300,000, and the hospital tax rate was 30%. Total assets totaled $70.3 million, and non-interest-bearing current liabilities were $22,300,000. The required rate of return established by Jefferson is equal to 17% of Invested capital. What is the residual income of Jefferson Memorial Hospital? Enter your answer in whole dollar.

Jefferson Memorial Hospital is an Investment center as a division of Hospitals United. During the past year, Jefferson reported an after-tax Income of $7.2 million. Total Interest expense was $3,300,000, and the hospital tax rate was 30%. Total assets totaled $70.3 million, and non-interest-bearing current liabilities were $22,300,000. The required rate of return established by Jefferson is equal to 17% of Invested capital. What is the residual income of Jefferson Memorial Hospital? Enter your answer in whole dollar.

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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Jefferson Memorial Hospital is an investment center as a division of Hospitals United. During the past year, Jefferson reported an after-tax income of $7.1 million. Total interest expense was $3,000,000, and the hospital tax rate was 30%. Total assets totaled $70.2 million, and non-interest-bearing current liabilities were $22,400,000. The required rate of return established by Jefferson is equal to 18% of invested capital. What is the residual income of Jefferson Memorial Hospital? Enter your answer in whole dollar.
A pharmaceutical company developed four investment plans. The initial investment and the corresponding annual cash flows of the four investment plans for consecutive 5 years are shown in the following Table Q1. Project Name I II III IV Initial Investment (OMR) 44000 62000 100000 109000 Annual Cash inflow (OMR) 10000 22000 27000 44000 Identify the best project and decide the ranking based on the following profitability methods. a) Average rate of return. b) Payback period. c) Net Present value with discounting rate at 8% d) Benefit to cost ratio with discounting rate at 11% e) Internal rate of return for range of suitable discounting rate
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