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A company had net operating income of $380,000 and average operating assets of $2,000,000. The corporation's minimum required return on new projects is 18%. The
A company had net operating income of $380,000 and average operating assets of $2,000,000. The corporation's minimum required return on new projects is 18%. The U.S. Division of the corporation is considering an investment $70,000 in a project that will generate a net income of $13,000. The U.S. Division currently earns a return on investment of 20%. The U.S. Division manager can be evaluated based on either the division's ROI (return on investment) or the division's RI (residual income). which of the following is true? A. The U.S. Division manager would invest in the new project only if the division's ROI is used for evaluating the division manager B. The U.S. Division manager would never invest in the new project whether the division's ROI or RI is used for evaluating the division manager. C. The U.S. Division would invest in the new project only if the division's RI is used evaluating the division manager. D. The U.S. Division manager would always invest in the new project whether the division's ROI or RI is used for evaluate the division manager. Campion Company has two divisions, A and B. The following data pertain to operations in May: If Campion Company's total fixed expenses were $34,000, its net operating income for May was: A. $14,000 B. $10,000 C. $22,000 D. $12,000 E. $16,000
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