5. Financial data for Redstone Company for last year appear be Redstone Company Balance Sheet Beginning Ending Balance Balance Assets: Cash Accounts receivable Inventory Plant and equipment (net) Investment in Balsam Company Land (undeveloped) Total assets Liabilities and owners $120,000 110.000 50.000 180.000 50,000 120.000 $630.000 $160.000 100.000 60.000 160,000 60.000 120.000 $660.000 equity: Accounts payable Long-term debt Owners' equity Total liabilities and owners' equity $70,000 500,000 60.000 $630,000 $90,000 500,000 70,000 $660,000 Redstone Company Income Statement Sales Less operating expenses Net operating income Less interest and taxes: Interest expense Tax expense Net income $1,222.000 1.099.800 122.200 $60,000 20.000 80.000 42.200 The company paid dividends of $32,200 last year. The Board of Directors of Redstone has set a minimum required rate of return of 20%. What was the company's residual income last year? (Hint: "Investment in Balsam Company" and "Land (undeveloped)" should be excluded when calculating average operating assets.) A. $4,700 B. $51,700 C. $28,200 D. $18,800 E. None of the above