Garcia Company Reports the Following Information What Is the Residual Income for Garcia Company?
A) $30,000

question 14

Multiple Choice

Garcia Company reports the following information:
$\begin{array}{ll}\text { Net operating income after taxes } & \$ 100,000 \\\text { Before-tax operating income } & \$ 300,000 \\\text { Average invested capital } & \$ 500,000 \\\text { After-tax cost of capital } & 10 \%\end{array}$
What is the residual income for Garcia Company?

• A) $30,000
• B) $50,000
• C) $250,000
• D) $450,000

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Definitions:

Carcinoma

A type of cancer that begins in the skin or in tissues that line or cover internal organs.

Granulation Tissue

New vascular tissue in granular form on an open wound, which is indicative of the healing process.

Fibroblasts

Cells in connective tissue that produce collagen and other fibers.

Collagen

The primary structural protein in the extracellular space in the various connective tissues of the body.