Chapter 12, Problem 12.2E

To determine

Concept introduction:

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. The formulas to calculate the Residual Income is as follows:

  $ResidualIncome=OperatingIncome–\left(Averageassets\times RequiredrateorReturn\right)$

To calculate: The residual income for the year.