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Sales $1,800,000 Operating Income $120,000 Average operating assets $450,000 Company's desired rate of return 9% ($370,500)
I'm trying to write a formula in excel which will give me the residual value. The actual equation is Residual Value = Operating income - ( rate of return % * Operating income). The operating income is 120,000 (B3). The rate of return is 9% (B5). The operating asset is 450,00 (B4). The residual value should calculate to be 79,500. The excel formula that I'm using =B3-(B4*(1+B5)) is returning a negative (375,000). How do I fix this formula to return the correct amount WITHOUT removing the percentage sign. This is for a Cost accounting class but we are required to provide a PowerPoint presentation with a link in excel to immediately change data within the presentation. Therefore, I wasn't certain if i should label this as accounting or math.