Calculate the residual income of runner hospital

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Runner Hospital is a division of Superior Healthcare that is organized as an investment center. In the past year, the hospital reported an after-tax income of $ 3,150,000. Total interest expense was $ 1,485,000, and the hospital's tax rate was 20 percent. Hospital assets totaled $ 31,500,000, and noninterest-bearing current liabilities were $ 10,260,000. Superior has established a required rate of return equal to 18 percent of invested capital.

Problem 1: Calculate the residual income/EVA of Runner Hospital.

Reference no: EM132998472

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