Figure 19-1 $$\begin{array} { c c c }
\text { Project } & \text { Income } & \text { Investment } \
\text { A } & £ 40,000 & £ 800,000 \
\text { B } & 44,000 & 400,000 \
\text { C } & 46,875 & 625,000
\end{array}$$ Assume the division's current ROI is 10 per cent and the firm's minimum required rate of return is 6 per cent.
-Refer to Figure 19-1. If you were the division manager and you were evaluated based on ROI, which projects would you accept?
A)Projects A, B, and C
B)Projects A and B
C)Projects B and C
D)Project B only

Question

Figure 19-1 $$\begin{array} { c c c } 
\text { Project } & \text { Income } & \text { Investment } \
\text { A } & £ 40,000 & £ 800,000 \
\text { B } & 44,000 & 400,000 \
\text { C } & 46,875 & 625,000
\end{array}$$ Assume the division's current ROI is 10 per cent and the firm's minimum required rate of return is 6 per cent.
-Refer to Figure 19-1. If you were the division manager and you were evaluated based on ROI, which projects would you accept?
A)Projects A, B, and C
B)Projects A and B
C)Projects B and C
D)Project B only

Quizplus · Accepted Answer

Project B is the only project that would increase the division's current ROI of 10%, as it has the highest ROI of 11% (calculated as Income/Investment = £44,000/£400,000). Projects A and C have ROIs of 5% and 7.5% respectively, which are below or do not sufficiently exceed the division's current ROI to justify their selection based on ROI criteria.

Figure 19-1 Assume the Division's Current ROI Is 10 Per Cent and Project