Top of Form

Westerville Company reported the following results from last year?s 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 company?s minimum required rate of return is 15%.

Questions:

1

What is the turnover related to this year?s investment opportunity? (Round your answer to 2 decimal places.)

2. What is the ROI related to this year?s investment opportunity? (Round your answer to the nearest whole percent.)

3. 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 .1234 should be entered as 12.3))

4.

If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))

5.

What is last year?s residual income

Top of Form Westerville Company reported the following results from last year's 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 $ 200,00 0 Contribution margin ratio 60 Fixed expenses $90,000 % of sales The company's minimum required rate of return is 15%. 0 Questions: 1 What is the turnover related to this year's investment opportunity? (Round your answer to 2 decimal places.) 2. What is the ROI related to this year's investment opportunity? (Round your answer to the nearest whole percent.) 3. 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 .1234 should be entered as 12.3)) 4. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3)) 5. What is last year's residual income