Question
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
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%.
*** QUESTION: What is the ROI related to this year's investment opportunity?
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