Shrewsbury Incorporated reported the following results from last years operations:

Sales	$ 7,200,000
Variable expenses	5,400,000
Contribution margin	1,800,000
Fixed expenses	1,296,000
Net operating income	$ 504,000
Average operating assets	$ 4,000,000

At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:

Sales	$ 2,480,000
Contribution margin ratio	40%	of sales
Fixed expenses	$ 868,000

The companys minimum required rate of return is 14%.

Last year's residual income was closest to:

Multiple Choice

$504,000

($56,000)

$544,000

($475,200)