Question
Westerville Company reported the following results from last years operations: Sales $ 1,200,000 Variable expenses 420,000 Contribution margin 780,000 Fixed expenses 600,000 Net operating income
Westerville Company reported the following results from last years operations: Sales $ 1,200,000 Variable expenses 420,000 Contribution margin 780,000 Fixed expenses 600,000 Net operating income $ 180,000 Average operating assets $ 600,000 This year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics: Sales $ 220,000 Contribution margin ratio 60 % of sales Fixed expenses $ 99,000 The companys minimum required rate of return is 20%.
What is the ROI related to this years investment opportunity? |
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
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