Exercise 11-2 Residual Income [LO11-2]

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 $460,000 on sales of $1,800,000. The companys average operating assets for the year were $2,000,000 and its minimum required rate of return was 14%.

Required:

Compute the companys residual income for the year.

Residual income