[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;