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:

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:

Quizplus · Accepted Answer

11eacbfc_c50e_30d0_8ffe_577e8dbcf03e_TB7552_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%