The Manager of the Recently Formed Oak Division of Parkes

Essay

The manager of the recently formed Oak Division of Parkes, Incorporated, is evaluating the following four investment opportunities available to the division. Parkes, Incorporated, requires a minimum return of 10 per cent. $$\begin{array}{l}\text { Investment }\\\begin{array} { c r c } \text { Opportunity } & { \text { Income } } & \text { Investment } \\\hline 1 & £ 91,000 & £ 650,000 \\2 & 63,000 & 700,000 \\3 & 59,400 & 540,000 \\4 & 117,600 & 980,000\end{array}\end{array}$$
a.Calculate the return on investment (ROI) for each investment opportunity.
b.If only one investment opportunity can be funded and the division is evaluated based on ROI, which investment opportunity would be accepted?
c.If Parkes, Incorporated, can fund all of the projects and wishes to achieve the best possible performance, which investments would be accepted?