Question

Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes: Invested Assets Income from Operations Rate of Return on Investment Minimum Rate of Return Minimum Acceptable Income from Operations Residual Income $860,000 $215,000 (a) 14% (b) (c) $610,000 (d) (e) (f) $67,100 $30,500 $380,000 (g) 14% (h) $41,800 (i) $290,000 $60,900 (j) 13% (k) (l) Determine the missing values, identifying each item by the appropriate letter. a. % b. $ c. $ d. $ e. % f. % g. $ h. % i. $ j. % k. $ l. $

Answer 1

• All working forms part of the answer
• Requirement solved:

Invested Asset	Income from Operations	ROR on Investment	Minimum ROR	Minimum Acceptable Income from Operations	Residual Income
[A]	[B]	[C = (B/A) x 100]	[D]	[E = A x D]	[F = B - E]
$                860,000.00	$                           215,000.00	25.00%	14.00%	$                     120,400.00	$        94,600.00
$                610,000.00	$                             97,600.00	16.00%	11.00%	$                        67,100.00	$        30,500.00
$                380,000.00	$                             53,200.00	14.00%	11.00%	$                        41,800.00	$        11,400.00
$                290,000.00	$                             60,900.00	21.00%	13.00%	$                        37,700.00	$        23,200.00

• Formulas used to calculate missing values:

Invested Asset	Income from Operations	ROR on Investment	Minimum ROR	Minimum Acceptable Income from Operations	Residual Income
[A]	[B]	[C = (B/A) x 100]	[D]	[E = A x D]	[F = B - E]
860000	215000	=215000/860000	0.14	=860000*14%	=215000-120400
610000	=67100+30500	=97600/610000	=67100/610000	67100	30500
380000	=380000*14%	0.14	=41800/380000	41800	=53200-41800
290000	60900	=60900/290000	0.13	=290000*0.13	=60900-37700