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1. Residual Income (LO 12-2)

   Midlands 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 400,000 on sales of 2,000,000. The companys average operating assets for the year were 2,200,000 and its minimum required rate of return was 16%. (The currency in the United Kingdom is the pound, denoted by )

   Required:

   Compute the companys residual income for the year.