Question: Could you show the step-by-step equation with numbers from this question? Please provide an answer after the explanation. Thank you Westerville Company reported the following

Could you show the step-by-step equation with numbers from this question? Please provide an answer after the explanation. Thank you

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%.

  1. What is the ROI related to this years investment opportunity percentage?
  2. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
  3. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (percentage)
  4. What is last years residual income?
  5. What is the residual income of this years investment opportunity?
  6. 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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