Reference no: EM131808094

[The following information applies to the questions displayed below.]

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

Sales	$	1,400,000
Variable expenses		510,000
Contribution margin		890,000
Fixed expenses		610,000
Net operating income	$	280,000
Average operating assets	$	875,000

This year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics:

Sales	$	280,000
Contribution margin ratio		50	% of sales
Fixed expenses	$	98,000

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

5. What is the turnover related to this year's investment opportunity? (Round your answer to 1 decimal place.)

Turnover;

6. What is the ROI related to this year's investment opportunity?

ROI; %

7. 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))

Margin; %

8. 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.)

Turnover;

9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))

ROI; %

11. What is last year's residual income?
Residual income;

12. What is the residual income of this year's investment opportunity?

Residual income;

13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?

Residual income;