1a. what is last years residual income?

1b. what is the residual income of this years investment opportunity?

1c. 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 $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 of sales Fixed expenses $ 90,000 The company's minimum required rate of return is 15%