Question
As manager of a division of your company, you are analyzing new similar-risk investment opportunities below. Your division has PHP 1.25 million in profits from
As manager of a division of your company, you are analyzing new similar-risk investment opportunities below. Your division has PHP 1.25 million in profits from PHP 5.0 million in investments.
| Investment | Amount of Opportunity | Annual Profit Investment |
| A | 260,000 | 1,600,000 |
| B | 170,000 | 900,000 |
| C | 120,000 | 1,000,000 |
| D | 280,000 | 800,000 |
| E | 240,000 | 1,200,000 |
Assume you wish to maximize residual income. Ranked from the most desirable, show which investments you should select if the cost of capital is 12%. Assume you wish to earn the highest return on investment (ROI), instead of residual income. Ranked from the most desirable, show the investments you should select.
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Introduction to Managerial Accounting
Authors: Peter Brewer, Ray Garrison, Eric Noreen
7th edition
978-1259675539, 125967553X, 978-1259594168, 1259594165, 78025796, 978-0078025792
