Asked by kiasjah mathews on Jun 24, 2024
Verified
The residual income for the Hum Division last year was:
A) $126,000
B) $46,000
C) $78,000
D) $22,000
Residual Income
The amount of income that an entity has after all personal debts and expenses, including a mortgage, have been paid.
- Calculate and analyze residual income.
Verified Answer
TD
Tarnesha DudleyJun 28, 2024
Final Answer :
C
Explanation :
Residual income = Net operating income - (Average operating assets × Minimum required rate of return)
= $150,000 - ($600,000 × 12%)= $78,000
= $150,000 - ($600,000 × 12%)= $78,000
Learning Objectives
- Calculate and analyze residual income.