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Westerville Company reported the following results from last years operations:

Sales	$	1,400,000
Variable expenses		720,000
Contribution margin		680,000
Fixed expenses		470,000
Net operating income	$	210,000
Average operating assets	$	875,000

At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:

Sales	$	560,000
Contribution margin ratio		70	% of sales
Fixed expenses	$	336,000

The companys minimum required rate of return is 15%.

1. What is last years margin, turnover and return on investment (ROI)?? (For Turn over Round your answer to 1 decimal place.)

2. What is the margin, turnover and return on investment (ROI) related to this years investment opportunity? (For turn over Round your answer to 1 decimal place.) 3. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin, turnover and return on investment (ROI) will it earn this year? (For margin and ROI Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3)) (For Turn over Round your answer to 2 decimal places.) 4. If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity?Would the owners of the company want her to pursue the investment opportunity? 5. What is last years residual income?What is the residual income of this years investment opportunity? If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year? 6. If Westervilles 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? 7. Assume that the contribution margin ratio of the investment opportunity was 65% instead of 70%. If Westervilles 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? Would the owners of the company want her to pursue the investment opportunity?