What Is the Residual Income or EVA for a Firm

Multiple Choice

What is the residual income or EVA for a firm with $1 million in total capital, $300,000 in net income, and a 20 percent cost of capital?

A) $100,000
B) $140,000
C) $240,000
D) $500,000 Total capital x cost of capital
$1 million x .2 = $200,000
Residual income = Net Income - Cost of Capital
= 300,000 - 200,000