Assume an organization's cost of capital is 8% and Department A currently has a 12% return on investment (ROI).The manager of Department A,who is evaluated on ROI,would MOST likely accept an investment that is expected to return:

Question

Quizplus · Accepted Answer

Since the organization's cost of capital is 8%, any investment that returns more than 8% would be acceptable to the organization. However, the manager of Department A is specifically evaluated on ROI. Therefore, in order to maintain or improve their performance, they would most likely accept an investment that is expected to return more than their current ROI of 12%. Thus, the correct answer is B, meaning that the investment should have a return of more than 12%.

Assume an Organization's Cost of Capital Is 8% and Department