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Question(s) / Instruction(s):

A companys current net operating income is $16,800 and its average operating assets are $80,000. The companys required rate of return is 18%. A new project being considered would require an investment of $15,000 and would generate annual net operating income of $3,000. What is the residual income of the new project?

a)            $300

b)            $2,700

c)            ($150)

d)            $3,000

 

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