Residual income, ROI, and EVA The following selected data pertain to Brannard Company’s
Construction Division for last year.
Sales $2,000,000
Variable costs $1,200,000
Traceable fixed costs $200,000
Average invested capital (assets) $3,000,000
Current liabilities $200,000
Required rate of return 15%
Marginal tax rate 36%
Weighted average cost of capital 12%
REQUIRED:
1. Calculate the residual income.
2. Calculate the return on investment.
3. Calculate the economic value added.
