One division of the Marvin Educational Enterprises has depreciable assets costing $4,100,000. The cash flows from these assets for the past three years have been:

Year		Cash flows
1		$	1,350,000
2		$	1,440,000
3		$	1,630,000

The current (i.e., replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight-line depreciation method; the estimated useful life is 10-years with no salvage value. For return on investment (ROI) calculations, Marvin uses end-of-year balances. What is the residual income for each year, assuming the cost of capital is 11% and Marvin uses historical costs and gross book values to compute residual income?

	Year 1			Year 2			Year 3
A.	$	489,000		$	579,000		$	769,000
B.	$	41,000		$	41,000		$	41,000
C.	$	270,000		$	288,000		$	326,000
D.	$	270,000		$	579,000		$	179,300

Choose:

Option A

Option B

Option C

Option D