Violet Company has sales of $457,000, net operating income of $249,000, average invested assets of $807,000, and a hurdle rate of 12.00 percent. Calculate Violet’s return on investment and its residual income.
Return On Investment _____%
Residual Income (Loss) _____
(Enter your Return On Investment answer as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answer to the nearest whole dollar.)
return on investment=Net operating income/Average invested assets
=249,000/807,000
=30.86%(Approx)
Residual income=Net operating income-(Average invested assets*Hurdle rate)
=249,000-(807,000*12%)
=$152160
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