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Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $1,000,000 300,000
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $1,000,000 300,000 700,000 500,000 $ 200,000 $ 625,000 This year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $200,000 60% of sales $ 90,000 The company's minimum required rate of return is 15%. 3. What is last year's return on investment (ROI)? ROI 10-a. If Westerville's chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity? Yes 10-b. Would the owners of the company want her to pursue the investment opportunity? Yes No O
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