Calculate Residual Income for Bright Technologies

Easy Equity Valuation Applications Residual Income Valuation

Imagine a company, Bright Technologies, which has a current book value of equity of $5,000,000. For the current year, Bright Technologies expects to earn a net income of $600,000. If the company's required rate of return on equity (cost of equity) is 10%, what is the residual income for Bright Technologies for the current year?

$100,000