Salvey Inc.reported the following results from last year's operations:
The company's average operating assets were $3,000,000.
At the beginning of this year,the company has a $300,000 investment opportunity that involves sales of $480,000,fixed expenses of $100,800,and a contribution margin ratio of 30% of sales.
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:
A) 16.6%
B) 1.3%
C) 18.2%
D) 15.3%

Question

Salvey Inc.reported the following results from last year's operations:
 The company's average operating assets were $3,000,000.
At the beginning of this year,the company has a $300,000 investment opportunity that involves sales of $480,000,fixed expenses of $100,800,and a contribution margin ratio of 30% of sales.
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:
A) 16.6% 
B) 1.3% 
C) 18.2% 
D) 15.3%

Quizplus · Accepted Answer

11ea7761_1664_81b6_81a5_d3856e423a82_TB2580_00 Net operating income = $504,000 + $43,200 = $547,200
Average operating assets = $3,000,000 + $300,000 = $3,300,000
ROI = Net operating income ÷ Average operating assets = $547,200 ÷ $3,300,000 = 16.6%