The Foundational 15 (Algo) [LO10-1, LO10-2]

Westerville Company reported the following results from last years operations:

Sales	$ 1,500,000
Variable expenses	650,000
Contribution margin	850,000
Fixed expenses	580,000
Net operating income	$ 270,000
Average operating assets	$ 1,000,000

At the beginning of this year, the company has a $160,000 investment opportunity with the following cost and revenue characteristics:

Sales	$ 240,000
Contribution margin ratio	70	% of sales
Fixed expenses	$ 144,000

The companys minimum required rate of return is 10%.

Foundational 10-7 (Algo)

7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Foundational 10-9 (Algo)

9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)