[The following information applies to the questions displayed below.]

Westerville Company reported the following results from last years operations:

Sales	$	1,000,000
Variable expenses		300,000
Contribution margin		700,000
Fixed expenses		500,000
Net operating income	$	200,000
Average operating assets	$	625,000

This year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics:

Sales	$	200,000
Contribution margin ratio		60	% of sales
Fixed expenses	$	90,000

The companys minimum required rate of return is 15%.

10-a. 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?

multiple choice 1

Yes

No

10-b. Would the owners of the company want her to pursue the investment opportunity?

multiple choice 2

Yes

No