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Westerville Company reported the following results from last years operations: Sales $ 1,500,000 Variable expenses 530,000 Contribution margin 970,000 Fixed expenses 670,000 Net operating income
Westerville Company reported the following results from last years operations:
Sales | $ 1,500,000 |
---|---|
Variable expenses | 530,000 |
Contribution margin | 970,000 |
Fixed expenses | 670,000 |
Net operating income | $ 300,000 |
Average operating assets | $ 937,500 |
At the beginning of this year, the company has a $212,500 investment opportunity with the following cost and revenue characteristics:
Sales | $ 340,000 | |
---|---|---|
Contribution margin ratio | 70 | % of sales |
Fixed expenses | $ 187,000 |
The companys minimum required rate of return is 10%.
8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
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