12. What is the residual income of this years investment opportunity?

13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?

Required information The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets 1,400,000 510,000 890,000 610,000 $ 280,000 875, 000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $ 280,000 50% of sales $ 98,000 The company's minimum required rate of return is 15%