Gilberto Co. reported the following statistics and results for 20x2: ROI 15% Inv

Question

Gilberto Co. reported the following statistics and results for 20x2:

ROI

15%

Invested capital

$221091

Return on sales

9%

Cost of capital

11%

What was Gilberto’s residual income for 20x2?

Select one:

a. $0

b. $8844

c. $4422

d. $13265

Select one:

a. 6.93%

b. 17.34%

c. 53.04%

d. 16.07%

Gilberto Co. reported the following statistics and results for 20x2:

ROI

15%

Invested capital

$221091

Return on sales

9%

Cost of capital

11%

What was Gilberto’s residual income for 20x2?

Select one:

a. $0

b. $8844

c. $4422

d. $13265

Explanation / Answer

Calculate residual income :

Actual income = 221091*15% = 33163.65

Minimum income = 221091*11% = 24320.01

Residual income = 33163.65-24320.01 = 8843.64

so answer is b) $8844

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