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Finder File Edit View Go Window Help ?4) 15% H. Sun 1:09 PM E CengageNOWV21 Online teaching and learning resource from Cengage Learning ? v2.cengagenow.com/ilrn/takeAssignment takeAssignmentMando?invoker=assignments&takeAssignmentSessionLocator;=assignment take&inprogress-false; Chapter 23 Assignment 1. EX.23-01.ALGO 2. EX.23-03 3. EX.23-06 ALGO 4. EX.23-07 ALGO 5. EX.23-13.ALGO 6. EX.23-15 ALGO 7. EX.23-18 8. EX.23-20 9. PR.23-01A BLANKSHEET 10. PR.23-02B.ALGO 11. PR.23-03B ALGO 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: Minimum Acceptable Income from Operations Minimum Income from Operations Invested Return on Return on Residual InvestmentInvestment Income $930,000 $223,200 $510,000 $350,000 $260,000 Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number 13% (D $56,100 $25,500 1496 $38,500 $52,000 i) 12% a. b. 12. PR.23-04B ALGO Check My Work Previous Next Progress: 6/12 items 29

Explanation / Answer

Before Solving all the questions, it should be kept in mind,

Residual Income = Actual Income - Minimum income to be earned on invested assets

Return on Income (%) = Income / Invested Assets * 100

Solution A: 24%

Return on Investment is calculated using the formulae as

= Income from Operations / Invested Assets * 100

= $223,200 / $930,000 *100

= 24%

Solution B: Minimum acceptable Income: $120,900

Minimum return on investment required = 13%

Invested Assets = $930,000

Minimum acceptable Income = $930,000 * 13% = $120,900

Solution C: $102,300

Residual Income = Actual Income – Minimum return

Residual Income = $223,200 - $120,900

= $102,300

Solution D: Income from Operations: $81,600

Since, Residual Income = Actual Income – Minimum return

Actual Income = Residual Income + Minimum Return

= $25,500 + $56,100

= $81,600

Solution E: 16%

Since income earned on asset is $81,600, return on investment can be calculated using the formulae as Actual Income / Invested Assets * 100

= $81,600 / $510,000 * 100

= 16%

Solution E: 11%

Since minimum income to be earned on asset is $56,100, minimum return on investment can be calculated using the formulae as Actual Income / Invested Assets * 100

= $56,100 / $510,000 * 100

= 11%

Rest of the solution can be solved on a similar methodology.

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