Reference no: EM132602812
Westerville Company reported the following results from last year's operations:
Sales $1,200,000
Variable expenses 420,000
Contribution margin 780,000
Fixed expenses 600,000
Net operating income $180,000
Average operating assets $600,000
At the beginning of this year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics:
Sales $220,000
Contribution margin ratio 60% of sales
Fixed expenses $99,000
The company's minimum required rate of return is 20%.
Question A). 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., 0.1234 should be entered as 12.3).)
Question B). If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)
Question C). If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3).)