Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Parsa Incorporated reported the following results from last years operations: Sales $ 14,000,000 Variable expenses 9,500,000 Contribution margin 4,500,000 Fixed expenses 3,800,000 Net operating income

Parsa Incorporated reported the following results from last years operations:

Sales $ 14,000,000
Variable expenses 9,500,000
Contribution margin 4,500,000
Fixed expenses 3,800,000
Net operating income $ 700,000
Average operating assets $ 7,000,000

At the beginning of this year, the company has a $1,100,000 investment opportunity with the following characteristics:

Sales $ 1,980,000
Contribution margin ratio 40 % of sales
Fixed expenses $ 653,400

If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:

Multiple Choice

12.0%

8.6%

10.4%

1.7%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advances In International Accounting Volume 20

Authors: J. Timothy Sale

1st Edition

0762313994, 9780762313990

More Books

Students also viewed these Accounting questions

Question

This is a project into which you can sink your teeth.

Answered: 1 week ago