1- what is last years residual income? 2- what is the residual income of this years investment opportunity? 3-what is the ROI related to this year’s investment opportunity? (Do not round intermediate calculations)
Westerville Company reported the following results from last year's operations:
sales $ 1,800,000
Variable expenses 740,000
contribution margin 1,060,000
Fixed expenses. 700,800
Net operating income $ 360,000
Average operating assets 1,200,880
At the beginning of this year, the company has a $400.000 investment opportunity with the following cost and revenue
characteristics:
sales. $ 6 00,000
Contribution margin ratio 60 % of sales
Fixed expenses. $ 288,006
The company's minimum required rate of retum is 10%
1- what is last years residual income?
2- what is the residual income of this years investment opportunity?
3-what is the ROI related to this year’s investment opportunity? (Do not round intermediate calculations)
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