- This topic has 4 replies, 2 voices, and was last updated 3 years ago by John Moffat.
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- June 5, 2020 at 5:19 am #572881
What is RI technically superior?
June 5, 2020 at 9:43 am #572885I meant why
June 5, 2020 at 10:34 am #572894RI and ROI both have advantages and disadvantages. However RI is more likely to make the divisional manager make goal congruent decisions.
I explain all this in my free lectures. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
June 5, 2020 at 4:27 pm #572921I have watched the lectures. How it helps make more goal congruent decisions
June 5, 2020 at 4:55 pm #572929But I explain in the lectures with examples!!!
Head office decides what return they want from the division and set this as the imputed interest rate. The manager is then incentivised to only take on new investments that give more than the imputed interest rate because only then does the RI increase and it is on this that his performance is measured.
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