Question

Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $460,000 on sales of $1,200,000. The company's average operating assets for the year were $1,400,000 and its minimum required rate of return was 15%. Required: Compute the company's residual income for the year. Average operating assets Net operating income Minimum required return Residual income

Answer 1

* ANSWERK Computation of company's residual income for the year for Tuniper Design lth of Manchester, : Given, the company's average operating assets for the year were $1,400,000 Minimum required rate of vetwen 15% Net operating income - $460,000 Residual Income - Operating Income. (Minimum required retwen & operating Vessels) - $460000 - ( 157. $1,400,000) $460000 - $210000 {Given} - $ 250000 - Hence, Residual Income of company is $250,000. for the year