Wiswell Incorporated reported the following results from last year's operations: The average operating assets were $8,000,000.At the beginning of this year, the company has a $900,000 investment opportunity that would involve sales of $2,070,000, a contribution margin ratio of 30% of sales, and fixed expenses of $538,200. The company's minimum required rate of return is 10%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A) $104,800
B) $925,600
C) ($19,800)
D) $994,800

Question

Wiswell Incorporated reported the following results from last year's operations:  The average operating assets were $8,000,000.At the beginning of this year, the company has a $900,000 investment opportunity that would involve sales of $2,070,000, a contribution margin ratio of 30% of sales, and fixed expenses of $538,200. The company's minimum required rate of return is 10%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A) $104,800 
B) $925,600 
C) ($19,800) 
D) $994,800

Quizplus · Accepted Answer

The Answer of Wiswell Incorporated reported the following results from last year's operations:  The average operating assets were $8,000,000.At the beginning of this year, the company has a $900,000 investment opportunity that would involve sales of $2,070,000, a contribution margin ratio of 30% of sales, and fixed expenses of $538,200. The company's minimum required rate of return is 10%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
A) $104,800 
B) $925,600 
C) ($19,800) 
D) $994,800

Wiswell Incorporated Reported the Following Results from Last Year's Operations