Chapter 10, Problem 14F15

Westerville Company reported the following result from last year’s operations:

At the beginning of this year, the company has a $120,000 investment opportunity with following cost and revenue characteristics:
The company’s minimum required rate of return is 15%.
Required:
14. If Westerville’s chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity?