The following information pertains to Moore Company: Invested capital is defined as total assets.The weighted average cost of capital is 10%.A project earning a ROI of 12% should be ________.
A)accepted
B)rejected
C)compared to the company's ROI
D)compared to the company's residual income

Question

The following information pertains to Moore Company:  Invested capital is defined as total assets.The weighted average cost of capital is 10%.A project earning a ROI of 12% should be ________.
A)accepted 
B)rejected 
C)compared to the company's ROI 
D)compared to the company's residual income

Quizplus · Accepted Answer

A project earning a ROI of 12% is higher than Moore Company's weighted average cost of capital, indicating that the project will generate a return greater than the cost of capital. Therefore, the project should be accepted.

The Following Information Pertains to Moore Company: Invested Capital