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?