eBook Calculator Determining missing items in return and res

eBook Calculator Determining missing items in return and residual income computations Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes Invested Income from Return on Minimum Minimum Acceptable Residual Assets Operations Investment Return Income from Operations Income $840,000 $184,800 $550,000 $370,000 $280,000 Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number 12% $60,500 $27,500 14% $40,700 $58,800 (j) 12%

Solution

a. Return on investment: Income form Operation/ Investment*100 184800 /840000 *100 = 22% b. Min Acceptable Income: Investment *12% 840000*12% = 100800 c. Residual income: Income from operation - Min acceptable income 184800- 100800 = 84000 d. Income from operation: 60500+27500 =88000 E. Return on investment: Income form Operation/ Investment*100 88000/550000 *100 = 16% f. Min Return: 60500/550000*100 = 11% g. Income from operation = 370000*14% = $ 51800 h. Min return: 40700 /370000 *100 = 11% i. Residual Income = Net income-Min Income 51800-40700 =11100 j. Return on investment: Income form Operation/ Investment*100 58800/280000 *100 = 21% k. Min Inocme: 280000*12% =33600 l. Residual Income = 58800-33600 =25200