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Westerville Company reported the following results from last years operations: Sales $ 1,600,000 Variable expenses 700,000 Contribution margin 900,000 Fixed expenses 660,000 Net operating income

Westerville Company reported the following results from last years operations:

Sales $ 1,600,000
Variable expenses 700,000
Contribution margin 900,000
Fixed expenses 660,000
Net operating income $ 240,000
Average operating assets $ 1,000,000

This year, the company has a $325,000 investment opportunity with the following cost and revenue characteristics:

Sales $ 520,000
Contribution margin ratio 70 % of sales
Fixed expenses $ 312,000
The companys minimum required rate of return is 15%.

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))

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%.))

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