Question

Which of the following formulas computes residual income?

a.Residual Income = Operating Income − Return on Investment
b.Residual Income = Operating Income − (Minimum Rate of Return × Average Operating Assets)
c.Residual Income = After-tax Operating Income / (Actual Percentage Cost of Capital × Total Capital Employed)
d.Residual Income = Operating Income / Average Operating Assets
e.Residual Income = (Minimum Rate of Return × Average Operating Assets) / Operating Income

Answer 1

C

Step-by-step explanation:

i think it's C. but I am not really show on it .

Answer 2

i think its d? but i dont know for sure