The following information pertains to Baltic Company:

-If invested capital is defined as stockholders' equity, a project earning an ROI of 10 percent should be
A) accepted.
B) rejected.
C) accepted if the desired rate of return is less than 10 percent.
D) rejected if the cost of capital is greater than 10 percent.

Question

The following information pertains to Baltic Company:
 
-If invested capital is defined as stockholders' equity, a project earning an ROI of 10 percent should be
A) accepted. 
B) rejected. 
C) accepted if the desired rate of return is less than 10 percent. 
D) rejected if the cost of capital is greater than 10 percent.

Quizplus · Accepted Answer

A project should be accepted if its ROI is greater than the desired rate of return. If the desired rate of return is less than 10 percent, the project earning an ROI of 10 percent is acceptable.

The Following Information Pertains to Baltic Company