The following information is available for Company X: What is Company X\'s residual income? (Ignore Tax) The following information is available for Company X: What is Company X\'s return on investment (ROI)? (Ignore Tax) The following information was presented by Delta Manufacturing Company for an asset purchased the previous year. What is the return on investment (ROI) assuming Delta (a) uses the straight-line method for depreciation and (b) beginning-of-year net book values to compute ROI? (Round your final answer to 2 decimal places.) Solution 1) net income = 60000 - 57000 = 3000 minimum reuired = 60000 * 0.08 =4800 residual income = 4800 - 3000 = 1800 2) net income = 65000 - 60450 = 4550 ROI = 4550/35000 = 13% 3) ROI = 23400/90000 = 26% .

1. The following information is available for Company X:
What is Company X's residual income? (Ignore Tax)
The following information is available for Company X:
What is Company X's return on investment (ROI)? (Ignore Tax)
The following information was presented by Delta Manufacturing Company for an asset
purchased the previous year.
What is the return on investment (ROI) assuming Delta (a) uses the straight-line method for
depreciation and (b) beginning-of-year net book values to compute ROI? (Round your final
answer to 2 decimal places.)
Sales $ 60,000
Operating expenses $ 57,000
Operating assets $ 24,000
Stockholder's equity $ 15,000
Cost of capital 8%
Solution
1)
net income = 60000 - 57000 = 3000
minimum reuired = 60000 * 0.08 =4800
residual income = 4800 - 3000 = 1800

2. 2)
net income = 65000 - 60450 = 4550
ROI = 4550/35000 = 13%
3)
ROI = 23400/90000 = 26%