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Mountville's results for the year and the potential new investment are shown below. If the new investment is approved and expected to create sales of $123,000, a contribution margin of 60% of sales and added fixed costs of $90,000, what is the next year's ROI expected to be (assume rest of firm operates same as last year)? Express as a percent, rounded to two decimal places. Sales $1,000,000 Variable expenses $300,000 Fixed expenses $500,000 Average operating assets $625,000 Minimum rate of return 15% New investment $10,000

Mountville's results for the year and the potential new investment are shown below. If the new investment is approved and expected to create sales of $123,000, a contribution margin of 60% of sales and added fixed costs of $90,000, what is the next year's ROI expected to be (assume rest of firm operates same as last year)? Express as a percent, rounded to two decimal places. Sales $1,000,000 Variable expenses $300,000 Fixed expenses $500,000 Average operating assets $625,000 Minimum rate of return 15% New investment $10,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mountville's results for the year and the potential new investment are shown below. If the new investment is approved and expected to create sales of $123,000, a contribution margin of 60% of sales and added fixed costs of $90,000, what is the next year's ROI expected to be (assume rest of firm operates same as last year)? Express as a percent, rounded to two decimal places. Sales $1,000,000 Variable expenses $300,000 Fixed expenses $500,000 Average operating assets $625,000 Minimum rate of return 15% New investment $10,000
Transcribed Image Text:Mountville's results for the year and the potential new investment are shown below. If the new investment is approved and expected to create sales of $123,000, a contribution margin of 60% of sales and added fixed costs of $90,000, what is the next year's ROI expected to be (assume rest of firm operates same as last year)? Express as a percent, rounded to two decimal places. Sales $1,000,000 Variable expenses $300,000 Fixed expenses $500,000 Average operating assets $625,000 Minimum rate of return 15% New investment $10,000
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