The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.]

Westerville Company reported the following results from last years operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses $ 90,000 The companys minimum required rate of return is 15%.

Foundational 10-12 12. What is the residual income of this years investment opportunity?