Division A had ROI of 15% last year.The manager of Division A is considering an additional investment for the coming year.What step will the manager likely choose to take?
A) Accept the investment as long as it provides positive operating income.
B) Accept the investment as long as its ROI is positive.
C) Reject the investment if it returns more than 15% ROI.
D) Reject the investment if it returns less than 15% ROI.
E) Reject the investment if it returns an ROI equal to 15%.

Question

Quizplus · Accepted Answer

The manager of Division A should only accept the investment if it returns a ROI of at least 15% (i.e., greater than or equal to the ROI of the previous year). Therefore, the manager should reject the investment if it returns less than 15% ROI. Option D is the correct choice as it aligns with this strategy. Option A and B are too lenient as they accept investments even if they generate low ROI, and option E is too strict as it rejects any investment that provides a ROI of 15%. Option C is not recommended as it may lead to missed opportunities for good investments.

Division a Had ROI of 15% Last Year