Determining missing items in return and residual income computations Data for Ub

Question

Determining missing items in return and residual income computations

Data for Uberto Company are presented in the following table of returns on investment and residual incomes:

Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number.

Invested Assets
Income from Operations
Return on Investment Minimum Return on Investment Minimum Acceptable Income from Operations
Residual Income $960,000 $211,200 (a) 12% (b) (c) $550,000 (d) (e) (f) $66,000 $22,000 $300,000 (g) 14% (h) $30,000 (i) $230,000 $43,700 (j) 12% (k) (l)

Explanation / Answer

Invested Assets Income from Operations Return on Investment Minimum Return on Investment Minimum Acceptable Income from Operations Residual Income 960000 211200 22% (211200/960000) 12% 115200 (960000*12%) 96000 (211200 - 115200) 550000 88000 (66000+22000) 16% (88000/550000) 12% (66000/550000) 66000 22000 300000 42000 (300000*14%) 14% 10% (30000/300000) 30000 12000 (42000 - 30000) 230000 43700 19% (43700/230000) 12% 27600 (230000*12%) 16100 (43700 - 27600) a 22% b 115200 c 96000 d 88000 e 16% f 12% g 42000 h 10% i 12000 j 19% k 27600 l 16100

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