Magnolia Company's Division A has operating income of $$ \$ 112,200 $$ and assets of $$ \$ 341,000 $$. The minimum acceptable return on investment is $$ 13 \% $$. What is the residual income for the division? $$ \$ \square $$

Question

UpStudy AI · Accepted Answer

To calculate the residual income for Magnolia Company's Division A, we can use the following formula:

$$
\text{Residual Income} = \text{Operating Income} - \text{Minimum Acceptable Return}
$$

First, we need to calculate the minimum acceptable return on investment:

$$
\text{Minimum Acceptable Return} = \text{Assets} \times \text{Minimum Acceptable Return Rate}
$$

Given:
- Operating Income = $$ 112,200 $$
- Assets = $$ 341,000 $$
- Minimum Acceptable Return Rate = $$ 13\% = 0.13 $$

Now, let's calculate the minimum acceptable return.

$$
\text{Minimum Acceptable Return} = 341,000 \times 0.13
$$

Next, we will calculate the residual income using the values we have.

Let's perform the calculations step by step.

1. Calculate the minimum acceptable return.
2. Calculate the residual income.

I'll start with the first calculation.
Calculate the value by following steps:
- step0: Calculate:
  $$341000\times 0.13$$
- step1: Multiply the numbers:
  $$44330$$
Calculate or simplify the expression $$ 112200 - 44330 $$.
Calculate the value by following steps:
- step0: Calculate:
  $$112200-44330$$
- step1: Subtract the numbers:
  $$67870$$
1. The minimum acceptable return is calculated as follows:
   $$
   \text{Minimum Acceptable Return} = 341,000 \times 0.13 = 44,330
   $$

2. Now, we can calculate the residual income:
   $$
   \text{Residual Income} = 112,200 - 44,330 = 67,870
   $$

Thus, the residual income for Division A is $$ \$ 67,870 $$.
The residual income for Division A is \$67,870.

Magnolia Company’s Division A has operating income of and assets of . The minimum acceptable return on investment is .
What is the residual income for the division?

Solución de inteligencia artificial de Upstudy

Responder

Solución

The Deep Dive

preguntas relacionadas

Latest Economics Questions

Magnolia Company’s Division A has operating income of and assets of . The minimum acceptable return on investment is . What is the residual income for the division?