Ranallo Inc. reported the following results from last year's operations:

	Sales	$11,400,000
	Variable expenses	7,480,000
	Contribution margin	3,920,000
	Fixed expenses	3,008,000
	Net operating income	$912,000
	Average operating assets	$6,000,000

At the beginning of this year, the company has a $1,800,000 investment opportunity with the following characteristics:

Sales	$3,600,000
Contribution margin ratio	40%	of sales
Fixed expenses	$1,116,000

The company's minimum required rate of return is 14%.

Required:

1. What was last year's margin? (Round to the nearest 0.1%.)

2. What was last year's turnover? (Round to the nearest 0.01.)

3. What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)

4. What is the margin related to this year's investment opportunity? (Round to nearest 0.1%.)

5. What is the turnover related to this year's investment opportunity? (Round to nearest 0.01.)

6. What is the ROI related to this year's investment opportunity? (Round to nearest 0.1%.)

7. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)

8. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)

9. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall ROI will this year? (Round to the nearest 0.1%.)

10. If Westerville's chief executive officer earns a bonus only if the ROI for this year exceeds the ROI for last year, would the CEO pursue the investment opportunity? Would the owners of the company want the CEO to pursue the investment opportunity?

11. What was last year's residual income?

12. What is the residual income of this year's investment opportunity?

13. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall residual income this year?

14. If Westerville's CEO earns a bonus only if residual income for this year exceeds residual income for last year, would the CEO pursue the investment opportunity?