## (Solved) Westerville Company reported the following results from last year's operations:

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Westerville Company reported the following results from last yearâ€™s operations:

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Â Â Â Â Sales\$1,000,000Â Â Â Variable expensesÂ 300,000Â Â Â Â Â Contribution marginÂ 700,000Â Â Â Â Fixed expensesÂ 500,000Â Â Â Â Â Net operating income\$Â 200,000Â Â Â Â Â Average operating assets\$625,000Â Â Â

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This year, the company has a \$120,000 investment opportunity with the following cost and revenue characteristics:

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Â Â Â Â Sales\$200,000Â Â Â

Contribution margin ratioÂ 60Â % of salesÂ Â

Fixed expenses\$90,000Â

Â The companyâ€™s minimum required rate of return is 15%.

1.What is the margin related to this yearâ€™s investment opportunity?Â

2.What is the turnover related to this yearâ€™s investment opportunity?Â (Round your answer to 2 decimal places.)

3.What is the ROI related to this yearâ€™s investment opportunity?Â (Round your answer to the nearest whole percent.)

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

5. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?Â (Round your answerÂ to 2 decimal places.)

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

Â 7.What is last yearâ€™s residual income?

8.What is the residual income of this yearâ€™s investment opportunity?

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

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