20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Project Appraisal

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
July 5, 2014 at 2:17 pm #178205
juwairiamahmood
Participant
- Topics: 9
- Replies: 18
An Investment division earns return on investment of 15% and a residual income of $200000.The cost of capital is 18%. A new project gives a ROCE of 16%. If the new project is accepted what will happen to the division’s ROI and RI ?
July 5, 2014 at 5:02 pm #178213
John Moffat
Keymaster
- Topics: 57
- Replies: 54671
The ROI will increase because the project return of 16% is more than the current return of 15%.
The RI will fall, because the return from the investment is less that the cost of capital.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.