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Find what is margin related to year investment opportunity

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Reference no: EM132633336

Westerville Company reported the following results from last year's operations:

Sales $1,400,000

Variable expenses 680,000

Contribution margin 720,000

Fixed expenses 440,000

Net operating income$ 280,000

Average operating assets$875,000

This year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics:

Sales $480,000

Contribution margin ratio 80 % of sales

Fixed expenses $336,000

The company's minimum required rate of return is 15%.

Required:

Question 1: What is the margin related to this year's investment opportunity?

Question 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)

Reference no: EM132633336

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