Good Evening!

I have a question that includes several variables that are used to find the residual income for the shareholders of the company VIM...

• VIM has a total assets of 3M financed with twice as much debt capital as equity capital.
• VIM's pretax cost of debt 6% and cost of equity capital is 10%.
• VIM had EBIT of 300K and was taxed at a rate of 40%.

Can you help explain the steps that help solve for residual income?

Thank you!