The formula for Residual Income is: Net income before taxes on project or investment opportunity – Target return in dollars: a % of employed assets or invested capital = Residual Income The imputed rate of interest that is used is not the average lending rate for the year being evaluated.
The formula for Residual Income is: Net income before taxes on project or investment opportunity – Target return in dollars: a % of employed assets or invested capital = Residual Income The imputed rate of interest that is used is not the average return on investments for the company over the last several years.
The formula for Residual Income is: Net income before taxes on project or investment opportunity – Target return in dollars: a % of employed assets or invested capital = Residual Income The imputed rate of interest that is used is not the historical weighted-average cost of capital for the company.
The formula for Residual Income is: Net income before taxes on project or investment opportunity – Target return in dollars: a % of employed assets or invested capital = Residual Income The imputed rate of interest that is used is the target return on investment that has been set by management.
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