Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Westerville Company reported the following results from last year$$s operations:

Sales $ $2,000,000$

Variable expenses $640,000$

Contribution margin $1,360,000$

Fixed expenses $860,000$

Net operating income $ $500,000$

Average operating assets $ $1,250,000$

At the beginning of this year, the company has a $$250,000$ investment opportunity with the following cost and revenue characteristics:

Sales $ $400,000$

Contribution margin ratio $70\%$ of sales

Fixed expenses $ $220,000$

The company$$s minimum required rate of return is $10\%.$

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