The manager can invest in an additional project that would require $40,000 investment in additional assets and would generate $6
,000 of additional income. The company's minimum rate of return is 14%. Which of the following statements is true? a. If the manager invests in the additional project, ROI of the division will decrease. b. The residual income of the project is less than the residual income of the division without the project; therefore the project will be rejected. c. Average investment for Stock Division will decrease if the project is accepted for investment. d. If the manager invests in the additional project, residual income of the division will increase. e. None of these.
1 answer:
Answer:
d. If the manager invests in the additional project, residual income of the division will increase.
Explanation:
RI = Operating Income - (Operating Assets x Minimum Required Rate of Return)
with adding the additional project
Operating Income: $60000 +6000 =$66000
Operating Assets: $375000+$40000 =$415000
Residual income =$66000-14%*$415000 =$7900
Consider the attached information.
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Answer:
X (the variable on the horizontal axis) will increases by 2.
Explanation:
The slope of a straight line is -3. So, m=6.
Slope of a straight line is
Y (the variable on the vertical axis) decreases by 6.
Change is y = -6
We need to find the change in (the variable on the horizontal axis).
Substitute the given values in the above formula.
Note: All options are incorrect.
Therefore, X (the variable on the horizontal axis) will increases by 2.