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Can you help me solve this question.
Company has capital employee of $200 000.00.It has cost of capital of 12% per year.
Residual Income is $36000.00.what is company return on investment.Please do not simply set test questions and expect a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain!
I assume that you have watched my free lectures on performance measurement, and that you therefore know what RI and ROI are.
Since you know the RI and can calculate the notional interest, you can add the two together to get the profit. The ROI is then the profit as a % of the capital.
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