Answer
both CEO and the owners will not want to pursue the investment as it results in a negative residual income
Work Step by Step
this year's NOI = (0.5 x $200 000) - $90000=$10000
this year's residual income = $10 000 - (0.15 x $120 000) = -$8000
last year's residual income = $106 250 (as calculated previously)