Westerville Company reported the following results from last years operations:

Sales	$	1,800,000
Variable expenses		740,000
Contribution margin		1,060,000
Fixed expenses		700,000
Net operating income	$	360,000
Average operating assets	$	1,200,000

This year, the company has a $400,000 investment opportunity with the following cost and revenue characteristics:

Sales	$	600,000
Contribution margin ratio		60	% of sales
Fixed expenses	$	288,000

The companys minimum required rate of return is 10%.

1. What is the ROI related to this years investment opportunity? ROI _____%

2. 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)) _________%

3. 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 ________

4. 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 .1234 should be entered as 12.3)) ROI _____%

5. What is last years residual income? Residual income _________

6. What is the residual income of this years investment opportunity? Residual income ________

7. 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 ___________

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