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A firm uses a combination of return on investment (ROI) and residual income to hold investment center managers accountable. The firm's discount rate (or hurdle

A firm uses a combination of return on investment (ROI) and residual income to hold investment center managers accountable. The firm's discount rate (or hurdle rate or cost of capital rate) is 12%. Egress, LLC's Western Region is run by a manager whose current ROI is 15%. This manager is evaluating the following capital projects (they are NOT mutually exclusive projects). Project 1 Assets Invested: $500,000 Expected profit: $70,000 Project 2 Assets Invested: $219,000 Expected profit: $43,800 Which of the following is TRUE about the firm's measures and these projects? a. Both measures suggest the manager should invest in both projects. b. ROI suggests the manager should only accept Project 2, but residual income suggests the managers should accept both projects. c. ROI suggests the manager should reject both projects, but residual income suggests the managers should accept Project 2. d. ROI suggests the manager should only accept Project 1, but residual income suggests the managers should accept both projects.

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