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 above. If you were the president of the firm, which projects would you want the division manager to accept?
A)Projects A, B, and C
B)Projects B and C
C)Project A only
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 above. If you were the president of the firm, which projects would you want the division manager to accept?
A)Projects A, B, and C
B)Projects B and C
C)Project A only
D)Project B only

Quizplus · Accepted Answer

Projects B and C have ROI higher than the division's current ROI of 10%. Project B's ROI is 11% (44,000 / 400,000) and Project C's ROI is 7.5% (46,875 / 625,000), both above the firm's minimum required rate of return of 6%. Project A's ROI is 5% (40,000 / 800,000), below the current ROI and the minimum required rate.

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