Saturday, 10 May 2014

Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to

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 £410,000 on sales of £1,400,000. The company's average operating assets for the year were £1,600,000 and its minimum required rate of return was 11%. (The currency used in England is the pound, denoted by £.)

Required:
Compute the company's residual income for the year. (Omit the "£" sign in your response.)
 
  Residual income £  


Explanation:
  Average operating assets
£1,600,000    
  Net operating income £410,000    
  Minimum required return: 11% × £ 1,600,000 176,000    
  Residual income
£234,000