Compute what is roi related to year investment opportunity

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Reference no: EM132721495

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?

Reference no: EM132721495

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