Condren Inc. reported the following results from last year's operations: $\begin{array}{lr}
\text { Sales } & \$ 12,000,000 \
\text { Variable expenses } & 7,680,000 \
\text { Contribution margin } & 4,320,000 \
\text { Fixed expenses } & 3,720,000 \
\text { Net operating income } & \$ 600,000 \
\text { Average operating assets } & \$ 6,000,000 \
\end{array}$ At the beginning of this year, the company has a $1,000,000 investment opportunity with the following characteristics:
$\begin{array}{lc}
\text { Sales } & \$ 1,100,000 \
\text { Contribution margin ratio } & 40 \% \text { of sales } \
\text { Fixed expenses } & \$ 363,000
\end{array}$ 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:

Question

Condren Inc. reported the following results from last year's operations: $\begin{array}{lr}
\text { Sales } & \$ 12,000,000 \
\text { Variable expenses } & 7,680,000 \
\text { Contribution margin } & 4,320,000 \
\text { Fixed expenses } & 3,720,000 \
\text { Net operating income } & \$ 600,000 \
\text { Average operating assets } & \$  6,000,000 \
\end{array}$ At the beginning of this year, the company has a $1,000,000 investment opportunity with the following characteristics:
$\begin{array}{lc}
\text { Sales } & \$ 1,100,000 \
\text { Contribution margin ratio } & 40 \% \text { of sales } \
\text { Fixed expenses } & \$ 363,000
\end{array}$ 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:

Quizplus · Accepted Answer

The combined ROI is calculated by dividing the new net operating income by the new average operating assets. The new net operating income is the sum of last year's net operating income and the net operating income from the new investment. The new average operating assets are the sum of last year's average operating assets and the new investment amount. The ROI is then calculated as (New Net Operating Income / New Average Operating Assets) * 100.

Condren Inc At the Beginning of This Year, the Company Has a \begin{array}{lr}\text

Condren Inc At the Beginning of This Year, the Company Has a \begin{array}{lr}
\text