Reference no: EM132802693
Westerville Company reported the following results from last year's operations:
Sales $ 1,000,000
Variable expenses 300,000
Contribution margin 700,000
Fixed expenses 500,000
Net operating income $ 200,000
Average operating assets $ 625,000
This year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics:
Sales $ 200,000
Contribution margin ratio 60 % of sales
Fixed expenses $ 90,000
The company's minimum required rate of return is 15%.
Problem 1: What is the ROI related to this year's investment opportunity?