Homework Answers
Ans
| Hurdle Rate | = | 10.60% |
Working:-
| Residual Income = Operating Income - (Hurdle Rate x Investment) | ||
| 10120 | = | 34500-(HR*34500/.15) |
| Hurdle Rate | = | 0.106 |
| Hurdle Rate | = | 10.60% |
Ans is 20%
Working:-
| Return on investment = Operating income/ Average asset | |
| = | 76000/380000 |
| = | 0.2 |
| = | 20% |
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