An Organization's Required Rate of Return Is 13

Multiple Choice

An organization's required rate of return is 13%. The ROI of Divisions A and B, respectively, is 10% and 15%. Each Division is considering a project that will have a 12% rate of return. If residual income is used to evaluate divisions, which of the following statements is true?

A) Both divisions will accept the project
B) Both divisions will reject the project
C) Division A will accept, and Division B will reject, the project
D) Division A will reject, and Division B will accept, the project