Question 2 Stanford company is a private and its management accountant department is planning to analyze its financial performance of its investment centre. They collected some information on the financial statement and decided to calculate the residual income of the company to get a better picture of the profit being generated by the company Information for analysis is provided in the table below 5 Current Cash A/C Receivable Inventory Current abilities Long Tennis Equity Equipment Property Plant Accumulated Depreciation - Pant 16 500 12.500 30,000 34,200 124 300 212.000 120.000 110.000 28.500 Tax rate COXES 30 59.500 Operating Expenses 34 200 Last Year Operating Assets 285,000 Sales 116 200 Interest on debt 7.5% Goremetent Boed rate 45 Market index Jan 2018 27680 Market index Dec 31, 2018 28950 Beta 1.7 Hind: Long terms are always wanted at Net Book Value All long terminis edhe Important :All workings should be shown REQUIRED Calculate Total Assets of the company using the accounting formula TA-L-E 2. Calculate gross original cost of the plant and calculate the net book value of plant 3. Calculate operating assets 4. Calculate EBIT, interest expense.tux 5. Calculate return on equity (re) 6. Calculate Residual Income 7. How does the residual income differ from Accounting income IERIT 8. Why do we use Residual income instead of Net Income? [Hint: why we disregard tax and interest rate in this measure)