Shrewsbury Inc. reported the following results from last year's operations: Sales$7,200,000Variable expenses 5,400,000Contribution margin 1,800,000Fixed expenses 1,296,000Net operating income$504,000Average operating assets$4,000,000?At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics: Sales$2,480,000 Contribution margin ratio 40% of salesFixed expenses$868,000 ?The company's minimum required rate of return is 14%.?The residual income for this year's investment opportunity when considered alone is closest to:
A. $108,800
B. $124,000
C. $0
D. $12,000
Answer: D
Business
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