The Manager of Alpha Division projects the folliwing for next year

Sales $100,000

Operating income 30,000

Operating assets $200,000

The manager can invest in an additional project that would require $30,000 average investment in additional assets and would generate $4,200 of additional income. The company's minimum rate of return is 12%.

Refer to Figure 12-2. What is the residual income for Alpha Division without the additional project and would Alpha Division accept or reject the project?

a. 24,000

b. 6,600

c. 30,000

d. 4,200

e. 6,000