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

Westerville Company reported the following results from last years operations:

Sales	$	1,500,000
Variable expenses		650,000
Contribution margin		850,000
Fixed expenses		580,000
Net operating income	$	270,000
Average operating assets	$	1,000,000

This year, the company has a $160,000 investment opportunity with the following cost and revenue characteristics:

Sales	$	240,000
Contribution margin ratio		70	% of sales
Fixed expenses	$	144,000

The companys 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?

Residual Income