Anthony manages the event$-$planning segment of a large rental business. As such, there are many costs to consider when setting rental

prices for his items. He recognizes there is demand for a very large tent, which the business currently doesn't have. The tent would

cost $$11,000$ and should last five years if handled properly. He estimates net rental revenue to be approximately $$5,400$ per year, with

additional set$-$up costs of $$2,320$ per year. Before making this purchase, he runs analyses to ensure the purchase is viable for his

segment and the company overall.

$($a$)$

Your answer is correct.

Calculate the ROI of this investment, recognizing straight$-$line depreciation will apply to this new asset.

ROI

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Attempts: $1$ of $5$ used

$($b$)$

Your answer is incorrect.

Calculate the residual income $($RI$)$ of this investment, assuming the company's minimum required return is $5\%.$