The following information pertains to Moore Company: $$\begin{array} { l r }
\text { Total assets } & \$ 150,000 \
\text { Total current liabilities } & 110,000 \
\text { Total expenses } & 160,000 \
\text { Total liabilities } & 115,000 \
\text { Total revenues } & 180,000
\end{array}$$ If invested capital is defined as total assets, a project earning an ROI of 12% should be _____.
A)accepted
B)rejected
C)rejected if the cost of capital is greater than 12%
D)rejected if the desired rate of return is less than 12%

Question

The following information pertains to Moore Company: $$\begin{array} { l r } 
\text { Total assets } & \$ 150,000 \
\text { Total current liabilities } & 110,000 \
\text { Total expenses } & 160,000 \
\text { Total liabilities } & 115,000 \
\text { Total revenues } & 180,000
\end{array}$$ If invested capital is defined as total assets, a project earning an ROI of 12% should be _____.
A)accepted
B)rejected
C)rejected if the cost of capital is greater than 12%
D)rejected if the desired rate of return is less than 12%

Quizplus · Accepted Answer

Given that invested capital is defined as total assets ($150,000), a project earning an ROI of 12% should be evaluated against the cost of capital. If the cost of capital is greater than 12%, the project's return does not cover the cost of financing, hence it should be rejected.

The Following Information Pertains to Moore Company If Invested Capital Is Defined as Total Assets, a Project