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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%
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