Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Westerville Company reported the following results from last years operations: Sales $ 1,300,000 Variable expenses 440,000 Contribution margin 860,000 Fixed expenses 600,000 Net operating income

Westerville Company reported the following results from last years operations:

Sales $ 1,300,000
Variable expenses 440,000
Contribution margin 860,000
Fixed expenses 600,000
Net operating income $ 260,000
Average operating assets $ 812,500

This year, the company has a $162,500 investment opportunity with the following cost and revenue characteristics:

Sales $ 260,000
Contribution margin ratio 80 % of sales
Fixed expenses $ 182,000
The companys minimum required rate of return is 15%.

1. What is last years margin?

Margin %

2. What is last years turnover? (Round your answer to 1 decimal place.)

Turnover

3. What is last years return on investment (ROI)?

ROI %

4. What is the margin related to this years investment opportunity?
Margin %

5. What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.)

Turnover

6. What is the ROI related to this years investment opportunity?

ROI %

7. 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))

Margin %

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. What is last years residual income?
Residual income

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

Residual income

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

Residual income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

help

Answered: 1 week ago

Question

Different types of Grading?

Answered: 1 week ago

Question

Explain the functions of financial management.

Answered: 1 week ago

Question

HOW MANY TOTAL WORLD WAR?

Answered: 1 week ago

Question

Discuss the scope of financial management.

Answered: 1 week ago

Question

2. Develop a persuasive topic and thesis

Answered: 1 week ago

Question

1. Define the goals of persuasive speaking

Answered: 1 week ago