Munoz Company has operating assets of $20,000,000. The companys operating income for the most recent accounting period was $2,700,000. The Dannica Division of Munoz controls $7,380,000 of the companys assets and earned $1,250,000 of its operating income. Munozs desired ROI is 10 percent. Munoz has $1,130,000 of additional funds to invest. The manager of the Dannica division believes that his division could earn $145,000 on the additional funds. The highest investment opportunity to any of the companys other divisions is 11 percent.

Required

3. Calculate the Dannica Division residual income from the new investment opportunity. If residual income is used as the sole performance measure