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ROI and Residual Income

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ROI and Residual Income
The following investment opportunities are available to an investment center manager: ROI and Residual Income The following investment opportunities are available to an investment center manager: Required: a. If the investment manager is currently making a return on investment of 16 percent, which project(s) would the manager want to pursue? b. If the cost of capital is 10 percent and the annual earnings approximate cash flows excluding finance charges, which project(s) should be chosen? c. Suppose only one project can be chosen and the annual earnings approximate cash flows excluding finance charges. Which project should be chosen? Required:
a. If the investment manager is currently making a return on investment of 16 percent, which project(s) would the manager want to pursue?
b. If the cost of capital is 10 percent and the annual earnings approximate cash flows excluding finance charges, which project(s) should be chosen?
c. Suppose only one project can be chosen and the annual earnings approximate cash flows excluding finance charges. Which project should be chosen?

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