The Following Data Pertains to the Retail Division of Motor

question 44

Multiple Choice

The following data pertains to the Retail Division of Motor Express: $$\begin{array} { l r } \text { Sales } & \$ 700,000 \\\text { Invested capital } & 200,000 \\\text { Net operating profit after taxes } & 49,000 \\\text { Noninterest-bearing current liabilities } & 20,000\end{array}$$ The minimum rate of return specified by Motor Express is 12 percent and the cost of capital is 8 percent. How much is residual income?

• A) $33,000
• B) $25,000
• C) $27,400
• D) $34,600

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