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Shrewsbury Inc. reported the following results from last year's operations:

Shrewsbury Inc. reported the following results from last year's operations:

 Sales$7,200,000

Variable expenses 5,400,000

Contribution margin 1,800,000

Fixed expenses 1,296,000

Net operating income$504,000

Average 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 sales

Fixed expenses$868,000 

 

The company's minimum required rate of return is 14%.

 If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:


  • $628,000
  • $672,000
  • $23,200
  • ($44,000)

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If the company pursues the investment opportunity,... View the full answer

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