EXERCISE 11-2 Residual Income [LO2] Midlands Design Ltd. of Manchester, England, is a company specializing in providing design ser- vices to residential developers. Last year the company had net operating income of 400,000 on sales of 2,000,000. The company's 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 company's residual income for the year.