Question

Supply the missing data

Sales: 7mil
NOI: 280K
Average operating assets: 2mil
ROI 14%
percentage: [blank]
Dollar amount: 320k
Residual income: [blank]

Answer 1

To fill in the missing data, we can use the given information about sales, net operating income (NOI), average operating assets, return on investment (ROI), and residual income.

1. **ROI Calculation:**
ROI (Return on Investment) is calculated using the formula:

\[
ROI = \frac{NOI}{Average \ Operating \ Assets}
\]

Given:
- NOI = 280K
- Average Operating Assets = 2mil

Calculating ROI:

\[
ROI = \frac{280,000}{2,000,000} = 0.14 \text{ or } 14\%
\]

This confirms the provided ROI is correct.

2. **Percentage Calculation: (NOI as a percentage of Sales)**
We can calculate the percentage of NOI in relation to sales using the formula:

\[
\text{Percentage} = \frac{NOI}{Sales} \times 100
\]

Substituting the values:

\[
\text{Percentage} = \frac{280,000}{7,000,000} \times 100 \approx 4\%
\]

3. **Residual Income Calculation:**
Residual Income is calculated using the formula:

\[
\text{Residual Income} = NOI - (Required \ Rate \ of \ Return \times Average \ Operating \ Assets)
\]

Here, we need to calculate the required rate of return first.

The required rate of return can be calculated using the ROI formula as follows:

\[
Required \ Rate \ of \ Return = ROI = 14\%
\]

Substituting the values into the residual income formula:

\[
\text{Residual Income} = 280,000 - (0.14 \times 2,000,000)
\]

Calculating the required return:

\[
Required \ Return = 0.14 \times 2,000,000 = 280,000
\]

Thus, we find:

\[
\text{Residual Income} = 280,000 - 280,000 = 0
\]

Now, gathering all results, we have:

- Percentage: **4%**
- Residual Income: **0**

In summary, the filled-in values are:
- Percentage: **4%**
- Residual Income: **0**