What Is the Residual Income or EVA for a Firm

question 106

Multiple Choice

What is the residual income or EVA for a firm with $1 million in total capital, $300,000 in net income, and a 20 percent cost of capital?

• A)$100,000
• B)$140,000
• C)$240,000
• D)$500,000 Total capital x cost of capital
• $1 million x .2 = $200,000
• Residual income = Net Income - Cost of Capital
• = 300,000 - 200,000

---

Definitions:

Bank Deposit

Money placed into a banking institution for safekeeping, which can include checking and savings accounts.

Bank Reconciliation

The process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.