Wiswell Inc

question 116

Multiple Choice

Wiswell Inc. 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

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Definitions:

Avoid The Contract

The act of declaring a contract null and void, meaning it is treated as if it never existed due to breaches or violations of terms.

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.

Legal Force

the effect or power of law enforced by judicial or governmental institutions to mandate compliance or punish violations.

Mentally Incompetent

A legal status indicating that an individual lacks the mental capacity to manage their own affairs or make important decisions.