Reference no: EM132600885

Selected information for ABC Company for the past two years appears below:

Year 1
Residual income ..................... $3,750
Variable costs ...................... 25% of sales
Fixed costs ......................... $172,500
Minimum required rate of return ..... 9%

Year 2
Residual income ..................... $74,000
Variable costs ...................... 60% of sales
Fixed costs ......................... $110,000
Minimum required rate of return ..... 16%
Turnover ............................ 5

The margin in year 2 was three times larger than the margin in year 1.

Question 1: Calculate ABC Company's return on investment (ROI) for year 2. Enter your answer as a number (i.e., 40). Do not enter your answer as a decimal (i.e., .40). Also, do not put the % symbol after your answer.