Bob Banker is the manager of one location of the Fastwhere Inc. chain, which is a delivery service. Banker's location is currently earning an ROI of 14 percent on existing average capital of $750,000. The minimum required return for Fastwhere Inc. is 12 percent. Banker is considering several additional investment projects, which are independent of existing operations and are independent of each other. The following table lists the projects.

Project	Required Capital	ROI
A-1	$	150,000		14.1	%
A-2		300,000		20.0
A-3		250,000		13.5
A-4		400,000		12.5
A-5		500,000		9.8

Required:

a.Which of the projects would Banker choose for investment if his objective were to maximize his location's ROI?

multiple choice 1

• A-2 and A-3
• A-2 and A-4
• A-1 and A-2
• A-5 and A-1
• A-3 and A-5

b.Which projects increase the value of Fastwhere Inc.?

multiple choice 2

• A-1, A-2, A-3, and A-4
• A-1, A-2, and A-3
• A-1, A-2, A-3, A-4, and A-5
• A-1 and A-2

c.Which projects have a negative residual income?(You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

• A-2unanswered
• A-4unanswered
• A-5unanswered
• A-1unanswered
• A-3unanswered

d.Create two rankings for the projects in order of acceptability if Banker is evaluated (1) on ROI and (2) on residual income.