9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year?

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? Would the owners of the company want her to pursue the investment opportunity?

11. What is last years residual income?

12. What is the residual income of this years investment opportunity?

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% of sales $ 216,000 The company's minimum required rate of return is 10%