Consider the following information for Executive Electronics: 

Required 

a. Evaluate the company’s performance for 2020 and 2021 in terms of residual income (RI), which is equivalent to EVA since there are no adjustments for accounting distortions. 

b. While income has increased in fiscal 2021, is it clear that the company’s performance has improved? 

c. (Optional) Explain why the required rate of return increased in fiscal 2021.

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12/31/2020 12/31/2021 Total assets $12,650,000 $12,100,000 Noninterest-bearing current liabilities Net income Interest expense 550,000 572,000 770,000 880,000 2,310,000 330,000 Tax rate 20% 20% Required rate of return 10% 12%