Skip to content
Sign inRegister

Ask the Tutor ACCA MA

Performance mgm

JJay5y ago
Example 2 A division currently earns a return on investment (ROI) of 20%. It is considering investing in a project which has a residual income (RI) of $1,000 at an imputed interest charge of 20%. What is the effect on the division’s ROI if the project is undertaken? A Increase B Decrease C Remain the same D Not possible to tell from this information
John MoffatJohn MoffatTutor5y ago#1
Sine the RI is positive, the profit must be more than 20% of the amount invested, and therefore the ROI will be more than 20% if they invest in the project.
Sign into reply to this topic.