Salvey Incorporated Reported the Following Results from Last Year's Operations

question 21

Multiple Choice

Salvey Incorporated 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 return on investment (ROI) for the entire company will be closest to:

• A) 16.6%
• B) 1.3%
• C) 18.2%
• D) 15.3%

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Definitions:

Alpha

The significance level set for a statistical hypothesis test, representing the probability of rejecting a true null hypothesis.

Critical Values

Threshold values that define boundaries for decision-making in hypothesis testing; values beyond these thresholds lead to rejection of the null hypothesis.

Null Hypothesis

The hypothesis that there is no significant difference or effect, used as a starting point in statistical testing.

Statistical Analysis

The process of collecting, examining, interpreting, and presenting numerical data to discover underlying patterns and trends.