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Hi…..
The residual income calculated in part (b) which is without the new investment, it gives, $ 1,412,000 whereas in part (d) with the new investment it gives, $1,332,000: it says if the investment is undertaken, RI is actually higher than without the investment. The suggestion is therefore that the investment should have been proceeded with.
Hasn’t the residual income decreased after the new investment?
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