Minnow Incorporated reported the following results from last years operations:
Sales	$11,400,000
Variable expenses	8,540,000
Contribution margin	2,860,000
Fixed expenses	1,948,000
Net operating income	$912,000
Average operating assets	$6,000,000
At the beginning of this year, the company has a $1,200,000 investment opportunity with the following characteristics:
Sales	$2,400,000
Contribution margin ratio	40%
Fixed expenses	$744,000
The companys minimum required rate of return is 14%.
Required:
1. What was last years residual income?
2. What is the residual income of this years investment opportunity?
3. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall residual income this year?
4. If Minnows CEO earns a bonus only if residual income for this year exceeds residual income for last year, would the CEO pursue the investment opportunity?