Question
Westerville Company reported the following results from last year's operations: Sales Variable expenses, Contribution margin Fixed expenses Net operating income $ 1,300,000 440,000 860,000
Westerville Company reported the following results from last year's operations: Sales Variable expenses, Contribution margin Fixed expenses Net operating income $ 1,300,000 440,000 860,000 600,000 $ 260,000 $ 812,500 Average operating assets At the beginning of this year, the company has a $162,500 investment opportunity with the following cost and revenue characteristics: Sales $ 260,000 Contribution margin ratio 80 % of sales $ 182,000 Fixed expenses The company's minimum required rate of return is 15% Foundational 10-12 (Algo) 12. What is the residual income of this year's investment opportunity?
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