- This topic has 1 reply, 2 voices, and was last updated 3 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
EF Plc has 3 divisions – P, Q and R – whose performance is assessed on return on investment (ROI). The ROI for the divisions for the coming year is expected to be 24%, 28% and 23% respectively. Two new proposals are now being considered:
(i) P is considering investing $75,000 in order to increase profit by $21,600 each year
(ii) Q is considering selling a machine, forecast to earn a profit of $2,500 in the coming year, for its carrying value (NBV) of $7,000.Which of the following divisions will reject the proposal under consideration because of its effect on ROI?
A. P
B. Q
C. P and Q
D. Neither P and QThe answer is Q. Why will we reject Q?
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.