Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 500,000 Contribution margin 1,000,000 Fixed expenses 700,000 Net operating income $ 300,000 Average operating assets $ 1,000,000 At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics: Sales $ 300,000 Contribution margin ratio 60 % of sales Fixed expenses $ 132,000 The company’s minimum required rate of return is 10%. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
Westerville Company reported the following results from last year’s operations:
| Sales | $ 1,500,000 |
|---|---|
| Variable expenses | 500,000 |
| Contribution margin | 1,000,000 |
| Fixed expenses | 700,000 |
| Net operating income | $ 300,000 |
| Average operating assets | $ 1,000,000 |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 300,000 | |
|---|---|---|
| Contribution margin ratio | 60 | % of sales |
| Fixed expenses | $ 132,000 |
The company’s minimum required rate of return is 10%.
What is last year’s
If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
Westerville Company reported the following results from last year’s operations:
| Sales | $ 1,500,000 |
|---|---|
| Variable expenses | 500,000 |
| Contribution margin | 1,000,000 |
| Fixed expenses | 700,000 |
| Net operating income | $ 300,000 |
| Average operating assets | $ 1,000,000 |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 300,000 | |
|---|---|---|
| Contribution margin ratio | 60 | % of sales |
| Fixed expenses | $ 132,000 |
The company’s minimum required rate of return is 10%.
If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year?
If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
