Question

Supply the missing data
Sales: 7mil
NOI: 280K
Average operating assets: 2mil
ROI 14%
percentage:16%
Dollar amount: 320k
Residual income: [blank]

Answer 1

To fill in the missing data, we can use the information provided to calculate the Residual Income (RI).

Residual Income is calculated using the formula:

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

Here, we need to identify the required rate of return, which is given as a percentage (16%).

1. First, we need to calculate the required return using the Average Operating Assets and the percentage:

\[
\text{Required Return} = \text{Average Operating Assets} \times \text{Percentage}
\]

Substituting the values:

\[
\text{Required Return} = 2,000,000 \times 0.16 = 320,000
\]

2. Next, we can now calculate the Residual Income using the formula mentioned earlier:

\[
\text{Residual Income} = \text{NOI} - \text{Required Return}
\]
\[
\text{Residual Income} = 280,000 - 320,000 = -40,000
\]

So, the missing Residual Income is **-40,000**.