Dade CorpHas Residual Income of $10,000

question 3

Multiple Choice

Dade Corp.has residual income of $10,000.If operating income equals $30,000 and the minimum required rate of return is 8%,what are average invested assets?

• A)$125,000
• B)$375,000
• C)$250,000
• D)$500,000

---

Definitions:

Fixed Costs

Fixed overheads that are unaffected by changes in production or sales volume, like rental costs, payroll, and insurance charges.

Strategic Option

Refers to choices available to a company or an investor that could affect key business or investment strategies beneficially.

Soft Rationing

The situation where a company limits the amount of financial resources available for certain projects based on internal policy decisions.

Hard Rationing

A severe form of capital rationing where external factors such as market conditions or regulatory constraints limit the availability of funding.