Westerville Company reported the following results from last years operations: Sales...
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Accounting
Westerville Company reported the following results from last years operations:
| Sales | $ 1,400,000 |
|---|---|
| Variable expenses | 720,000 |
| Contribution margin | 680,000 |
| Fixed expenses | 470,000 |
| Net operating income | $ 210,000 |
| Average operating assets | $ 875,000 |
At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 560,000 | |
|---|---|---|
| Contribution margin ratio | 70 | % of sales |
| Fixed expenses | $ 336,000 |
The companys minimum required rate of return is 15%.
7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
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