Shrewsbury Inc. reported the following results from last year's operations: At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
$\begin{array}{lc}
\text { Sales } & \$ 2,480,000 \
\text { Contribution margin ratio } & 40 \% \text { of sales } \
\text { Fixed expenses } & \$ 868,000
\end{array}$ 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:

Question

Shrewsbury Inc. reported the following results from last year's operations:  At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
$\begin{array}{lc}
\text { Sales } & \$ 2,480,000 \
\text { Contribution margin ratio } & 40 \% \text { of sales } \
\text { Fixed expenses } & \$ 868,000
\end{array}$ 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:

Quizplus · Accepted Answer

The Answer of Shrewsbury Inc. reported the following results from last year's operations:  At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
$\begin{array}{lc}
\text { Sales } & \$ 2,480,000 \
\text { Contribution margin ratio } & 40 \% \text { of sales } \
\text { Fixed expenses } & \$ 868,000
\end{array}$ 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:

Shrewsbury Inc The Company's Minimum Required Rate of Return Is 14