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Problem on-calculating residual income

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Question: Calculating Residual Income.

For fiscal year 2018, Katherine's Department Store had a net income of $6,000,000. Interest expense was $2,250,000 and the company's tax rate on income was 40 percent. Total assets were $80,000,000, and noninterest-bearing current liabilities were $6,700,000/ The company's cost of capital is 10 percent.

Calculate NOPAT, invested capital, and residual income, and comment on the company's profitabilty.

Reference no: EM131756515

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