Westerville Company reported the following results from last year%u2019s operati

ID: 2374023 • Letter: W

Question

Westerville Company reported the following results from last year%u2019s operations:

Sales $ 1,000,000

Variable expenses 300,000

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Contribution margin 700,000

Fixed expenses 500,000

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Net operating income $ 200,000

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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

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The company%u2019s minimum required rate of return is 15%.

1. What is last year's margin?

2. What is last year's turnover?

3. What is lat year's ROI?

4. What is the margin related to this year's investment opportunity?

5. What is the turnover related to this year's investment opportunity?

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

7. If the company pursues the investment opportunity adn otherwise performs thesame as last year, what margin wil it earn this year?

8. If the company pursues the investment opportunity adn otherwise performs the same as laye year, what turnover will it earn this year

Here is what I come up with for 1-6:1)Margin=20%,2)Turnover=1.60,3)ROI=32%4)Margin=15%,2)1.67,3)25%.Please help me with questions 7-9.Thankyou

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