Robichau Incorporated reported the following results from last years operations: Sales...
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Accounting
Robichau Incorporated reported the following results from last years operations:
Sales
$ 6,300,000
Variable expenses
4,930,000
Contribution margin
1,370,000
Fixed expenses
803,000
Net operating income
$ 567,000
Average operating assets
$ 3,000,000
At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics:
Sales
$ 1,530,000
Contribution margin ratio
30
% of sales
Fixed expenses
$ 306,000
The companys minimum required rate of return is 20%.
If the company pursues the investment opportunity and otherwise performs the same as last year, the combined ROI for the entire company will be closest to:
Multiple Choice
3.9%
24.0%
14.5%
18.5%
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