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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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