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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 $ 2,200,000

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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 $ 2,200,000 660,000 1,540,000 1,100,000 $ 440,000 $ 1,375,000 At the beginning of this year, the company has a $275,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $ 440,000 60 % of sales $ 220,000 The company's minimum required rate of return is 15%. 6. What is the ROI related to this year's investment opportunity? ROI 8. 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.) Turnover 9. 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%.)) 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 O No 10-b. Would the owners of the company want her to pursue the investment opportunity? Yes O No 15-a. Assume that the contribution margin ratio of the investment opportunity was 55% instead of 60%. If Westerville's Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity? Yes O No 15-b. Would the owners of the company want her to pursue the investment opportunity? Yes O No

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