Compute the company’s residual income for the year. value: 0.37 points Midlands

Question

Compute the company’s residual income for the year. value: 0.37 points Midlands Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of £410,000 on sales of £2,200,000. The company's average operating assets for the year were £2,400,000 and its minimum required rate of return was 11%. (The currency in the United Kingdom is the pound, denoted by £.) Required: Compute the company's residual income for the year. (Omit currency sign in your answers.) Residual income

Explanation / Answer

Net operating income £ 410,000.00 Less: Minimum required return £ 264,000.00 2400000*11% Residual income £ 146,000.00

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