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1) To see whether the new investment is attractive to the company or not:
We need to calculate ROI / RI formulas and then compare it with target ROI / RI to see the performance of the company. But do we always take additional profit and capital investment when calculating ROI and RI or it depends on the question?2) To see whether the new investment is attractive to the manager or not:
We need to calculate ROI / RI formulas with new investment and then compare it without new investment to see the performance of the manager.Is that correct?
In answer to both of your questions it depends on the wording of the question in the exam as to whether we compare the total results of the division with and without the new investment, or whether we just do the calculations on the amount invested in the new investment and the returns just from the new investment.
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