10 a If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity Yes No 10 b Would the owners of the company want her to pursue the investment opportunity Yes No 11 What is last years residual income 12 What is the residual income of this years investment opportunity 13 If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year 14 If Westervilles 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 15 a Assume that the contribution margin ratio of the investment opportunity was 65 instead of 70 If Westervilles 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 Yes No 15 b Would the owners of the company want her to pursue the investment opportunity Yes No Westerville Company reported the following results from last year's operations Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $ 1,800,000 435,000 1,365,000 1,005,000 $ 360,000 $ 1,200,000 At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics Sales Contribution margin ratio Fixed expenses $ 360,000 70 $ 216,000 of sales The company's minimum required rate of return is 10

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10 a  If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity  Yes No 10 b  Would the owners of the company want her to pursue the investment opportunity  Yes No 11  What is last years residual income  12  What is the residual income of this years investment opportunity  13  If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year  14  If Westervilles 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  15 a  Assume that the contribution margin ratio of the investment opportunity was 65  instead of 70   If Westervilles 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  Yes No 15 b  Would the owners of the company want her to pursue the investment opportunity  Yes No Westerville Company reported the following results from last year's operations  Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $ 1,800,000 435,000 1,365,000 1,005,000 $ 360,000 $ 1,200,000 At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics  Sales Contribution margin ratio Fixed expenses $ 360,000 70 $ 216,000   of sales The company's minimum required rate of return is 10

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10-a. If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she

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