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Westerville Company reported the following results from last years operations: Sales $ 1,750,000 Variable expenses 520,000 Contribution margin 1,230,000 Fixed expenses 880,000 Net operating income

Westerville Company reported the following results from last years operations:

Sales $ 1,750,000
Variable expenses 520,000
Contribution margin 1,230,000
Fixed expenses 880,000
Net operating income $ 350,000
Average operating assets $ 875,000

At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:

Sales $ 320,000
Contribution margin ratio 60 % of sales
Fixed expenses $ 128,000

The companys minimum required rate of return is 20%.

1. 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))

2. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)

3. 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., 0.1234 should be considered as 12.3%.))

4. What is the residual income of this years investment opportunity?

5. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?

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