Question
A company has three investment alternatives. The alternatives have similar economic lives. The following data is available for each alternative Investment A Investment B Investment
A company has three investment alternatives. The alternatives have similar economic lives. The following data is available for each alternative
| Investment A | Investment B | |
| Investment | $100,000 | $100,000 |
| Annual net income | $31,000 | $18,000 |
| Residual value of investment | $10,000 | $20,000 |
Compute the ROI for investments A & B
ROI on Investment A ________
ROI on Investment B ______
Assuming the company can select only one investment, which investment would be selected under ROI analysis?
Investment (A or B) should be selected.
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Cornerstones of Managerial Accounting
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman
2nd Canadian edition
978-0176721237, 978-0176530884
