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John Moffat.
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Shi2004
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Hello sir this is an mcq question.
In the question it says that a new investment will increase annual operating profit by 25000.
So profit should be 360+25 but in its answer the profit is only 25. Why they did not add the 360?
John Moffat
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By all means use the new total profit, in which case you must also use the new total investment. The conclusion will be the same.
Since the ROI of the new investment is less than the current ROI, the ROI for the whole division will fall.
Since the RI of the new investment is positive then the RI of the whole division will increase.
Have you watched my free lectures on this?
Shi2004
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