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Required information [The following information applies to the questions displayed below.) Westerville Company reported the following results from last year's operations: Sales Variable expenses
Required information [The following information applies to the questions displayed below.) Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,400,000 510,000 890,000 610,000 $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50% of sales Fixed expenses $ 98,000 The company's minimum required rate of return is 15%. 14. If Westerville's chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity? Yes No
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