Bilbo Company Evaluates Its Managers on the Basis of Return

Multiple Choice

Bilbo Company evaluates its managers on the basis of return on investment (ROI) . Division Three has an ROI of 15% while the company as a whole has an ROI of only 10%. Which of the following performance measures will motivate the managers of Division Three to accept a project earning a 12% return?

A) Return on investment (ROI)
B) Residual income (RI)
C) Both ROI and RI will motivate the manager to accept the project.
D) Neither ROI nor RI will motivate the manager to accept the project.