Barrington corporation reports the following information.
2017 2016
cash $15,960 $14,490
net operating working capital $6,150 $3,300
net long-term operating assets $9,360 $9,300
net nonoperating obligations $2,700 $2,100
net operating profit after tax $1,950 $1,620
weighted average cost of capital 7.0% 7.0%
a. what is the company's residual operating income (ropi) for 2017?
select one:
a. $ 864
b. $1,068
c. $1,215
d. $ 988
e. none of the above

Option (B) is correct.

Explanation:

Net operating assets (Beginning):

= Net operating working capital + Net long-term operating assets

= $3,300 + $9,300

= $12,600

Company's residual operating income (ROPI) for 2017:

= Net operating profit after tax - [Net operating assets (Beginning) × Weighted average cost of capital]

= $1,950 - [$12,600 × 7.0%]

= $1,950 - $882

= $1,068

FV= $1,259.71

Explanation:

Giving the following information:

Initial deposit (PV)= $1,000

Number of periods (n)= 3 biannual years

Interest rate (i)= 8% = 0.08

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1+i)^n

FV= 1,000*(1.08^3)

FV= $1,259.71