Westerville Company reported the following results from last years operations:

Sales	$	1,200,000
Variable expenses		420,000
Contribution margin		780,000
Fixed expenses		600,000
Net operating income	$	180,000
Average operating assets	$	600,000

This year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics:

Sales	$	220,000
Contribution margin ratio		60	% of sales
Fixed expenses	$	99,000

The companys minimum required rate of return is 20%.

.	What is the residual income of this years investment opportunity?

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