C is corrent. Residual income would be computed as follows: Net operating income ($300,000) minus the interest on invest capital [$90,000 (18% x 500,000)] is equal to $210,000.
A is incorrect because residual income is equal to net operating income minus interest on invested capital.
A is incorrect because residual income is equal to net operating income minus interest on invested capital.
D is incorrect because residual income is equal to net operating income minus interest on invested capital.
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