Question

Determining missing items in return and residual income computations

Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes:

Invested Assets		Income from Operations		Return on Investment		Minimum Return		Minimum Acceptable Income from Operations		Residual Income
$940,000		$244,400		(a)		15%		(b)		(c)
$510,000		(d)		(e)		(f)		$61,200		$20,400
$300,000		(g)		14%		(h)		$33,000		(i)
$230,000		$46,000		(j)		12%		(k)		(l)

Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number.

a.									%
b.	$
c.	$
d.	$
e.									%
f.									%
g.	$
h.									%
i.	$
j.									%
k.	$
l.	$

Answer 1

Invested	Income from		Return on		Minimum	Minimum Alternative		Residual
Assets	Operations		Investment		Return	Income		Income
940000	244,400		26%		15%	141,000		103,400
510000	81600		16%		12%	61,200		20,400
300000	42000		14%		11%	33,000		9,000
230000	46000		20%		12%	27600		18,400
a.	26%
b.	141000
c.	103400
d.	81600
e.	16%
f.	12%
g.	42000
h.	11%
i.	9000
j	20%
k.	27600
l.	18400