Reference no: EM131600112

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

Sales $2,300,000     

Variable expenses 670,000

Contribution margin 1,630,000    

Fixed expenses 1,170,000      

Net operating income$ 460,000     

Average operating assets$1,437,500

This year, the company has a $287,500 investment opportunity with the following cost and revenue characteristics:

Sales $460,000  

Contribution margin ratio 50 % of sales 

Fixed expenses$161,000 

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

QUESTION: If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year?